LINN Energy, Inc. (ticker: LNGG) announced that it has signed a definitive agreement to sell its Oklahoma Waterflood and Texas Panhandle properties to an undisclosed buyer for a contract price of $122 million, subject to closing adjustments.

The combined properties to be sold consist of approximately 179,000 net acres in Oklahoma and Texas with third quarter net production of approximately 5,200 BOEPD, proved developed reserves of ~22.8 MMBOE (1) and proved developed PV-10 of approximately $124 million. (1) Annualized field level cash flow on these properties is approximately $21 million (2).

  • Each acre sold for approximately $681.56
  • $23,461 per flowing BOEPD
  • $5.35 per BOE of reserves

Additionally, the sale of these mature assets substantially reduces the company’s future abandonment liabilities and operating expenses. Estimated annual general and administrative expenses for these combined properties is approximately $4-6 million, which is not included in the field level cash flow estimates provided.

The sale is expected to close in the first quarter of 2018 with an effective date of October 1, 2017. Jefferies LLC acted as financial advisor for the Texas Panhandle properties and Kirkland & Ellis LLP acted as legal counsel for both transactions.

(1) Proved developed reserves are as of year-end 2016, rolled forward to the effective date of October 1, 2017 and updated with pricing of $3.00 per MMBtu for natural gas and $50.00 per bbl for oil. PV-10 represents the present value, discounted at 10% per year, of estimated future net cash flows. The company’s calculation of PV-10 herein differs from the standardized measure of discounted future net cash flows determined in accordance with the rules and regulations of the SEC in that it is calculated before income taxes with the pricing and timing assumptions noted.

(2) Annualized field level cash flow estimates are calculated from the first three quarters of 2017 (January 2017 through September 2017).

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