Independent energy company LINN Energy LLC (LINE) has agreed to pay $305 million to purchase oil and natural gas properties from an unnamed seller. The transaction, which is expected to close by May 27, will be funded by LINN’s borrowings under its revolving credit facility.
The assets, located in the Permian Basin of West Texas, hold an estimated 18 million barrels of oil equivalent in proved reserves (71% oil) and will add 2,800 barrels of oil equivalent (75% oil) to LINN’s daily production. Other attractive characteristics of the Permian Basin properties include reserve life of approximately 17 years, roughly 120 proved low-risk drilling locations, and expanding the company’s footprint in the prolific Wolfberry oil play.
The potential addition of these assets is expected to double LINN’s oil production and reserves in the Permian Basin as well as significantly strengthen its presence in the area. The deal is also expected to be immediately accretive to the company’s cash flows.
This is LINN’s second major acquisition in as many weeks, following the buyout of natural gas properties in the Antrim Shale of northern Michigan from Houston-based HighMount Exploration & Production LLC for $330 million.
Formed in April 2005, LINN Energy is an independent oil and natural gas development company focused on mature producing basins in the U.S. As of year-end 2009, Linn had 1.7 trillion cubic feet equivalent in proved reserves.
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