Linn Energy Inc.’s (OTC: LNGG) U.S. asset selling tour most recently rolled into West Texas, where the company said Feb. 14 it agreed to divest conventional assets and production for $119.5 million.
The playlist for the Houston-based company has essentially remained at one song for more than a year: sell out of any asset area that doesn’t fit into its strategy of dividing the company into three new components.
So far, Linn’s contract prices for its assets have eclipsed $1.85 billion.
In its recent divestiture, Linn said it sold about 28,000 net acres in West Texas with average production in 2017 of about 6,300 barrels of oil equivalent per day (boe/d).
Annualized field level cash flow on the properties is about $32 million, Linn said. The company will save an estimated $3 million annually on related general and administrative expenses after the sale closes.
The assets’ proved developed reserves include about 14.4 million boe and a proved developed PV-10 value of about $106 million, continuing Linn’s largely successful divestitures at prices exceeding PV-10 value.
The transaction follows Linn’s announcement in January that it had sold interests in the Altamont Bluebell Field in Utah to an undisclosed buyer for $132 million. The company is also actively marketing its Permian Basin assets in Texas and New Mexico and the Drunkards Wash coalbed methane development in Utah.
Linn’s divestitures are part of a plan to further separate into three companies this year, including Roan Resources LLC, which will operate as a pure-play in the Merge, Scoop and Stack. Linn also has a 105,000 net-acre position in the northwest Stack.
As of Feb. 12, Roan’s net production averaged 40,800 boe/d. Linn holds a 50% equity interest in the company with partner Citizen Energy II. The company has also formed a midstream company in the Midcontinent called Blue Mountain Midstream LLC. A third company with assets in several states has yet to be named.
Linn’s West Texas sale is expected to close first-quarter 2018 with an effective date of Jan. 1. RBC Richardson Barr and Jefferies LLC were Linn’s co-financial advisers and Kirkland & Ellis LLP was its legal counsel for the transaction.
Darren Barbee can be reached at email@example.com.
CEO Predictions: Tighter Oil Market in 2023, Permian ‘Plateau’ this Decade
2023-03-08 - Hess Corp. CEO John Hess said investment in oil and gas and clean energy hasn’t kept up with growing demand, while ConocoPhillips Chairman and CEO Ryan Lance says the Permian will probably plateau later this decade.
Pioneer's Sheffield Expects OPEC to Boost Oil Prices as Brent Tumbles
2023-01-05 - Pioneer Natural Resources' Scott Sheffield predicted that only Chevron, Pioneer and ConocoPhillips have the capacity to produce more than 1 MMboe/d in the Permian Basin by 2030.
US Drillers Cut Most Rigs in a Week Since Sept. 2021: Baker Hughes
2023-01-06 - Shale braces for another disappointing year of weaker output gains, rising costs and dwindling reserves in 2023.
U.S. Oil & Gas Rig Count Falls for Third Week in a Row - Baker Hughes
2023-03-03 - The oil and gas rig count, an early indicator of future output, fell for the third week in a row by four to 749 in the week to March 3, the lowest since June.
US Oil Rig Count Falls This Week by Most Since Sept 2021: Baker Hughes
2023-01-20 - The U.S. oil rig count fell 10 to 613, the lowest since November, while gas rigs rose six to 156, in their biggest weekly rise since February, according to Baker Hughes.