Linn will receive ExxonMobil's interest in its Hill Property located in South Belridge Field, which is currently producing approximately 3.4 MBoe/d (~100% oil) with a shallow base decline of approximately 10%. Proved reserves are estimated to be approximately 27 MMBoe, 51% of which is developed. Linn has identified significant upside potential through optimization projects, increased steam injection and extensive down spacing from more than 300 future drilling locations. Linn currently estimates total resource potential for the Hill Property to be approximately 67 MMBoe (~100 percent oil).
In exchange, ExxonMobil will receive approximately 17,000 net acres prospective for horizontal Wolfcamp drilling in the Midland Basin and approximately 4.7 MBoe/d of current production. Proved reserves are estimated to be 19 MMBoe. Additionally, ExxonMobil will receive approximately 800 acres in the New Mexico Delaware Basin.
Significant benefits Linn expects to receive from the ExxonMobil trade:
- Excellent mature assets with a decline rate of approximately 10% and reserve life of approximately 22 years;
- Hill Property currently generates more operating cash flow than Permian Basin properties traded and is expected to be accretive to excess of net cash provided by operating activities after distributions to unitholders;
- Total resource potential of approximately 67 MMBoe and approximately 27 MMBoe of proved reserves;
- Approximately 300 future drilling locations, significantly increasing the Company's California inventory;
- Tax efficient exchange of assets; and
- Credit positive from increased cash flow and reserves.
Following the closing of this transaction with ExxonMobil, Linn will have remaining production of approximately 10 MBoe/d and approximately 13,000 net acres in the Midland Basin that is prospective for horizontal Wolfcamp drilling.
ExxonMobil is based in Irving, Texas and Linn is based in Houston.
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