HOUSTON — Linn Energy, Inc. announced today that it has signed a definitive agreement to sell its interest in properties located in western Wyoming to Jonah Energy LLC for a contract price of $581.5 million, subject to closing adjustments. Proceeds from the sale are expected to be used to reduce outstanding borrowings under the company’s revolving credit facility and term loan.
While Linn is actively marketing areas in several states, the Wyoming assets were not among its announced divestiture candidates and may speak to the company’s focus on its Oklahoma assets.
Jonah Energy, based in Denver, will purchase about 27,500 net acres—about 80% of which is undeveloped—including 16,000 in the Jonah and Pinedale Anticline, for $581.5 million, the companies said. The acquisition includes Linn’s interests in more than 1,200 producing wells. Jonah operates more than half of the acquired wells.
JONAH ENERGY PERSPECTIVE
“This transaction significantly expands our footprint at an attractive valuation while leveraging the concentrated and efficient nature of our operations,” said Tom Hart, Jonah’s CEO. “With the addition of these assets, we will operate the vast majority of acreage and production in one of the most prolific natural gas fields in North America.”
“This sale allows us to significantly reduce leverage and improve financial flexibility,” said Mark E. Ellis, President and CEO. “We are aggressively pursuing higher return opportunities in the SCOOP / STACK / Merge play where we are increasing rig activity and building out our midstream business. In addition, we are pursuing other emerging horizontal plays in the Mid-Continent, Rockies, North Louisiana and East Texas.”
“This sale also marks the first step of transitioning LINN from a conventional production-based MLP to a streamlined growth-oriented enterprise. The Board will continue to work hand-in-hand with management to execute on a value maximizing and transformative business plan. This plan includes continuing the previously announced sale of non-core assets, accelerating investment in key horizontal growth plays and focusing on our overall cost structure to become a best-in-class low cost operator,” said chairman Evan Lederman on behalf of the company’s board.
The sale of Jonah is expected to close in the second quarter of 2017 with an effective date of March 1, 2017. This transaction is subject to satisfactory completion of title and environmental due diligence, as well as the satisfaction of closing conditions. Jefferies LLC acted as sole financial advisor and Kirkland & Ellis LLP as legal counsel during the transaction.
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Compiled and Published by GIB KNIGHT
Gib Knight is a private oil and gas investor and consultant, providing clients advanced analytics and building innovative visual business intelligence solutions to visualize the results, across a broad spectrum of regulatory filings and production data in Oklahoma and Texas. He is the founder of OklahomaMinerals.com, an online resource designed for mineral owners in Oklahoma.