Jonah Energy now owns majority of Jonah field acreage and production; credit facility goes up to $1.125 billion
Privately held Jonah Energy announced the closing of its purchase of 27,000 net acres in the Jonah field from Linn Energy (ticker: LNGG) for $566 million.
In addition to the acreage, Linn Energy sold its interest in 1,200 producing wells in the area. Jonah Energy already has an interest in most of these wells, and is the operator for more than half of them.
In total, these assets produced an average of 150 MMcfe/d in 2016 with proved reserves of 384 Bcfe. Jonah reports that more than 80% of the acquired acreage is currently undeveloped. The purchase price has dropped since the transaction was announced in early May, decreasing from $581.5 million to $566 million.
The Jonah field is estimated to contain 10.5 Tcf of natural gas, and was first found to be economic in 1993. The field has multiple stacked pay sections over nearly 3,500’ of depth, meaning most development utilizes vertical wells. However, Linn Energy recently participated in several horizontal wells that have produced encouraging results.
Pro Forma for the transaction Jonah will produce about 450 MMcf/d net from over 2,100 producing wells. Including the 27,000 from Linn Energy, Jonah will own 145,000 acres in the Pinedale and Jonah fields. Tom Hart, Jonah CEO, also mentioned several Linn employees joined Jonah after the acquisition was announced.
When the acquisition was first announced Hart commented, “This transaction significantly expands our footprint at an attractive valuation while leveraging the concentrated and efficient nature of our operations. 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. We will implement a robust development program on the acquired assets, which have seen minimal investment over the last several years.”
At the close of the purchase, Jonah Energy’s credit facility was upsized from $825 million to $1.125 billion.
Jonah is held by a private investor group led by TPG Capital LLC which includes EIG Global Energy Partners and company management. Jonah Energy was founded in 2014.
