LINN Energy Announces $2.3 Billion Acquisition of Assets from Devon Energy
June 30 2014 - 9:03AM
LINN Energy, LLC (Nasdaq:LINE) ("LINN" or "the Company") and
LinnCo, LLC (Nasdaq:LNCO) ("LinnCo") announced today that LINN has
signed a definitive agreement to acquire assets in five U.S.
operating areas from Devon Energy Corporation (NYSE:DVN) ("Devon")
for $2.3 billion. The assets are currently producing approximately
275 MMcfe/d, approximately 80 percent of which is natural gas, with
a shallow base decline of approximately 14 percent. Total proved
reserves are estimated to be between 1.3-1.5 Tcfe (approximately 75
percent PDP) with total resource potential of approximately 3 Tcfe.
The asset package is comprised of approximately 900,000 net acres
across the Rockies, Mid-Continent, east Texas, north Louisiana and
south Texas regions with approximately 4,500 total wells. LINN has
identified over 1,000 future drilling locations and over 600
recompletion opportunities. LINN's acquisition of Devon assets is
intended to be financed ultimately through the sale of its Granite
Wash assets and other non-producing acreage in LINN's portfolio.
Potential excess proceeds from the sale of assets, if any, will be
used initially to reduce debt and for general corporate purposes.
"Early in 2014, we outlined four keys to success at LINN:
realize value for the Midland Basin position; continue to make
accretive acquisitions; reduce capital intensity while increasing
efficiency; and improve credit metrics," said Mark E. Ellis,
Chairman, President and Chief Executive Officer. "We believe
today's announcement is a positive development in achieving these
objectives. As we enter into the second half of the year, we remain
committed to these important goals."
Sale of Granite Wash Assets
LINN plans to sell its position in the Granite Wash and
Cleveland plays located in the Texas Panhandle and western
Oklahoma. Currently, LINN is operating four drilling rigs in the
area and producing 230 MMcfe/d of liquids-rich natural gas. LINN's
talented team has successfully tested and developed 17 horizontal
intervals, including shallow oil, liquids-rich Granite Wash and
deep Atoka natural gas. As a result of this delineation, LINN has
catalogued significant drilling inventory over its approximately
147,000 net acre position. LINN first began horizontally drilling
the Granite Wash in 2010 and has grown production in this prolific
area from 65 MMcfe/d to its current rate. To support this growth,
the Company developed a substantial integrated network of
infrastructure including midstream and water handling facilities
which is capable of and recently handled a larger rig program.
Significant benefits from the acquisition of Devon assets and
the planned sale of LINN assets:
- Reinforce LINN's mission of developing mature, long-life oil
and natural gas properties;
- Lower decline rate and reduce capital intensity;
- Tax efficient upon successful completion of 1031 like-kind
exchange;
- Meaningful additions to the Company's Rockies and Mid-Continent
positions;
- Accretive to excess of net cash provided by operating
activities after distributions to unitholders;
- Credit positive from increased steady stream of predictable
cash flow, production and reserves.
Interim Financing
LINN has secured $2.3 billion of committed interim financing for
the acquisition of Devon assets, subject to final documentation.
The financing was lead arranged by Scotiabank and included
Barclays, RBC Capital Markets and Wells Fargo.
The transaction with Devon is subject to satisfactory completion
of title and environmental due diligence, as well as the
satisfaction of closing conditions. The transaction is expected to
close in the third quarter of 2014 with an effective date of April
1, 2014.
Supplemental information regarding the acquisition of Devon
assets is posted at www.linnenergy.com.
Advisors
Scotia Waterous acted as the exclusive financial advisor to LINN
during this transaction.
ABOUT LINN ENERGY
LINN Energy's mission is to acquire, develop and maximize cash
flow from a growing portfolio of long-life oil and natural gas
assets. LINN Energy is a top-15 U.S. independent oil and natural
gas development company, with approximately 8 Tcfe of proved
reserves (pro forma for announced 2014 trade and acquisition) in
producing U.S. basins as of December 31, 2013. More
information about LINN Energy is available at
www.linnenergy.com.
ABOUT LINNCO
LinnCo was created to enhance LINN Energy's ability to raise
additional equity capital to execute on its acquisition and growth
strategy. LinnCo is a Delaware limited liability company that
has elected to be taxed as a corporation for United States federal
income tax purposes, and accordingly its shareholders will receive
a Form 1099 in respect of any dividends paid by LinnCo. More
information about LinnCo is available at www.linnco.com.
SAFE HARBOR FOR FORWARD-LOOKING STATEMENTS
This press release includes "forward-looking statements." All
statements, other than statements of historical facts, included in
this press release that address activities, events or developments
that the Company expects, believes or anticipates will or may occur
in the future are forward-looking statements. These statements
include, but are not limited to forward-looking statements related
to acquisitions, trades or divestitures, timing and payment of
distributions, taxes and the expectations of plans, strategies,
objectives and anticipated financial and operating results of the
Company, including the Company's drilling program, production,
hedging activities, capital expenditure levels and other guidance
included in this press release. These statements are based on
certain assumptions made by the Company based on management's
experience and perception of current conditions, historical trends,
anticipated future developments and other factors believed to be
appropriate. Such statements are subject to a number of
assumptions, risks and uncertainties, many of which are beyond the
control of the Company, which may cause actual results to differ
materially from those implied or expressed by the forward-looking
statements. These include risks relating to the Company's financial
performance and results, availability of sufficient cash flow to
pay distributions and execute its business plan, prices and demand
for oil, natural gas and natural gas liquids, the ability to
replace reserves and efficiently develop current reserves and other
important factors that could cause actual results to differ
materially from those projected as described in the Company's
reports filed with the Securities and Exchange Commission. Please
read "Risk Factors" in the Company's Annual Report on Form 10-K and
other public filings and press releases.
Any forward-looking statement speaks only as of the date on
which such statement is made and the Company undertakes no
obligation to correct or update any forward-looking statement,
whether as a result of new information, future events or
otherwise.
CONTACT: LINN Energy, LLC and LinnCo, LLC
Investors and Media:
Clay Jeansonne, Vice President, Investor and Public Relations
281-840-4193
Zach Dailey, Director, Investor Relations
713-904-6547
Sarah Nordin, Public Relations & Media
713-904-6605
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