Independent energy company Linn Energy LLC (LINE) has agreed to pay $330 million to purchase natural gas properties from Houston-based HighMount Exploration & Production LLC. The transaction, which is expected to close by the end of next month, will be part-funded by Linn’s public offering of 12 million units of its limited liability company interests.
The assets, located in the Antrim Shale of northern Michigan, hold an estimated 266 billion cubic feet of natural gas equivalent in proved reserves (85% proved developed) and will add 30 million cubic feet equivalent per day (99% natural gas) to Linn’s daily production. Other attractive characteristics of the Antrim Shale properties include low decline rate of approximately 6%, reserve life of approximately 24 years, 1,350 operated wells, as well as roughly 300 proved low-risk drilling locations.
The potential addition of these assets to Linn’s high rate-of-return horizontal drilling program in the Granite Wash area (located in the Panhandle of Texas and Oklahoma) and oil-focused projects in the Permian Basin (in western Texas and eastern New Mexico) blends a nice balance to the company’s portfolio.
Linn also informed that it has secured commitments to amend its five-year revolving credit facility. The amendment will provide a $1.5 billion facility with a borrowing base of the same value, and extend the maturity to March 2015.
In a separate announcement, Linn outlined plans for a proposed $500 million private offering of its senior unsecured notes due 2020 to reduce debt and unwind certain interest rate derivative contracts.
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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