LINN Energy To Buy Permian Basin Properties For $525 Mln - Update

(RTTNews) - LINN Energy, LLC (LINE), an independent oil and natural gas development company, along with LinnCo, LLC (LNCO), announced Thursday that it has signed a definitive agreement to buy oil and natural gas properties located in the Permian Basin for a contract price of $525 million.

The deal price will be subject to closing conditions. The company anticipates to close the acquisition during the fourth quarter of 2013.

Mark Ellis, Chairman, President and Chief Executive Officer, said, "This bolt-on acquisition in the Permian Basin is an attractive addition to our assets in the area. This acquisition increases our exposure to oil and adds more than 300 proved low-risk infill drilling opportunities as well as future waterflood potential. We expect this transaction will be immediately accretive to cash available for distribution."

LINN Energy, which aims to acquire, develop and maximize cash flow from a growing portfolio of long-life oil and natural gas assets, said it intends to finance the deal with proceeds from a committed $500 million senior secured term loan to be entered into at closing with certain participants in its lender group and borrowings under its revolving credit facility. The term loan is expected to have a maturity of April 2018.

From the acquisition, LINN expects certain characteristics, including estimated first twelve months net production of approximately 4,800 Boe/d primarily from the Clearfork formation, of which approximately 63 percent oil. The company also projects low operating expenses of about $15.00 per Boe, and proved reserves of about 30 MMBoe, of which approximately 70 percent oil.

The acquisition expects to bring reserves to production ratio of approximately 17 years, future additional waterflood reserve potential of approximately 24 MMBoe, approximately 124 producing wells and more than 6,250 net acres as well as approximately 300 identified future low--risk, infill drilling locations.

LINN Energy shares closed Wednesday's trading at $27.90, up $3.16 or 12.77 percent. In pre-market activity, shares were gaining $0.62 or 2.22 percent, and trading at $28.52.

LinnCo shares closed Wednesday's trading at $32.06, up $3.44 or 12.02 percent.