Linn Energy LLC, Houston, (Nasdaq: LINE) plans to enter the Green River Basin of southwestern Wyoming via an acquisition in Jonah Field from BP America Production Co. for $1.025 billion in cash.
The assets include approximately 750 producing wells on more than 12,500 net acres. Current production is about 145 million cubic feet equivalent per day (55% operated by production), with a decline rate of approximately 14%. Proved reserves are approximately 730 billion cubic feet equivalent (56% proved developed producing). About 73% of the reserves are natural gas, 23% liquids and 4% oil. Identified resource potential is 1.2 trillion cubic feet equivalent.
Upside includes 650 drilling locations.
BP is selling its operations center in Sublette County, Wyoming, and all of its working interest in approximately 260 operated wells. Recent gas production net-to-BP is 80 million standard cubic feet equivalent a day, and non-operated wells with recent net-to-BP production of 66 MMscfe per day. BP’s upstream production operations in Moxa and Wamsutter, Wyoming, are unaffected by the sale.
"This acquisition provides Linn with a significant operated position in the Green River Basin of Wyoming and the opportunity to add employees to our staff who have hands-on experience with operations in the Jonah Field," says Mark E. Ellis, Linn chairman, president and chief executive. “The long-life, low-decline characteristics of the Jonah Field make this asset an excellent fit for us.”
Linn has hedged all of the expected net oil and natural gas production for approximately six years through 2017 through a combination of swaps and puts.
Bob Dudley, BP group chief executive, says “This sale will allow us to realize the value of the mature Jonah assets and reinvest in higher growth opportunities in BP’s North America gas business and elsewhere. We are actively managing our portfolio of assets and businesses worldwide, focusing our investment on future growth in BP’s areas of strength.”
Including the pending Jonah Field transaction, Linn has announced or closed almost $3 billion of acquisitions year to date. The sale of BP's Jonah assets brings the total value of divestments that BP has agreed since the start of 2010 to around $24 billion. BP expects this total to increase to $38 billion by the end of 2013.
The transaction is expected to close on or before July 31, 2012.
Barclays Capital, BMO Capital Markets and RBC Richardson Barr are financial advisors to Linn.
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