LINN Energy Announces Sale of Remaining Permian Basin Wolfcamp Acreage for $281 Million
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 sell its remaining position in Howard County in the Permian Basin for a contract price of $281 million. The transaction is expected to close in the third quarter 2015 with an effective date of May 1, 2015.
The properties sold include approximately 6,400 net acres prospective for horizontal Wolfcamp drilling and approximately 2.0 MBoe/d of current production from 133 gross wells.
The transaction is subject to satisfactory completion of title and environmental due diligence, as well as the satisfaction of closing conditions.
LINN Energy Finalizes Strategic Alliance With Quantum Energy Partners
LINN Energy, LLC (NASDAQ:LINE) (“LINN” or the “Company”) and LinnCo, LLC (NASDAQ:LNCO) (“LinnCo”) announced today that LINN has signed definitive agreements with private capital investor Quantum Energy Partners (“Quantum”) to fund selected future oil and natural gas acquisitions and the development of acquired assets (“QL Energy I, LLC” or “AcqCo”).
Quantum has agreed to initially commit up to $1 billion of equity capital to fund acquisitions and development of oil and natural gas assets. LINN will have the ability to participate in all acquisition opportunities with a direct working interest ranging from 15 percent to 50 percent. AcqCo assets will be managed by LINN in exchange for reimbursement of general and administrative expenses. Additionally, after certain investor return hurdles are met, LINN will have the ability to earn a promoted interest in AcqCo. Upon the sale of any assets within AcqCo, LINN will be given right of first offer to acquire the assets.
Strategic advantages expected for LINN:
- Creates a “drop-down” entity in which assets can be purchased and harvested on an ongoing basis;
- Allows participation in acquisitions outside of the conventional MLP asset profile;
- Enhances ability to capture acquisition opportunities during distressed market conditions;
- Provides potentially more accretion to cash flow per unit as a result of the promote structure;
- Creates a long-term partnership with a private capital provider which is scalable and repeatable; and
- Provides LINN with the dynamic ability to acquire and finance acquisitions at the most advantageous times.
Strategic advantages expected for Quantum and QL Energy I, LLC:
- Opportunity to partner with a premier management team and company to acquire and develop assets of size;
- Creates a well-funded entity, whose principals collectively have an exceptional track record of acquisition-driven value creation and growth;
- Ability to leverage LINN’s existing scale of operations and workforce across multiple basins in the United States; and
- Creates a long-term partnership with the largest upstream MLP/LLC, with the ability to develop and then monetize mature assets efficiently over time.
“We are very excited to have finalized this new opportunity and are pleased to be working with Quantum in this unique partnership,” said Mark E. Ellis, Chairman, President and Chief Executive Officer. “We anticipate a number of attractive assets may come to market in the current environment and we expect these agreements will position the Company to take advantage of such opportunities.”
Advisors
Jefferies LLC acted as financial advisor to LINN for the AcqCo agreement. In addition, Latham & Watkins provided legal advice to LINN while Vinson & Elkins provided legal advice to Quantum.
LINN Energy Finalizes Strategic Alliance With GSO Partners
LINN Energy, LLC (NASDAQ:LINE) (“LINN” or the “Company”) and LinnCo, LLC (NASDAQ:LNCO) (“LinnCo”) announced today that LINN has signed a formal agreement with private capital investor GSO Capital Partners L.P. (“GSO”), the credit platform of The Blackstone Group L.P. (NYSE:BX) (“Blackstone”), to fund oil and natural gas development (the “DrillCo Agreement”).
Funds managed by GSO and its affiliates have agreed to commit up to $500 million with 5-year availability to fund drilling programs on locations provided by LINN. Subject to adjustments depending on asset characteristics and return expectations of the selected drilling plan, GSO will fund 100 percent of the costs associated with new wells drilled under the DrillCo Agreement and is expected to receive an 85 percent working interest in these wells until it achieves a 15 percent internal rate of return on annual groupings of wells, while LINN is expected to receive a 15 percent carried working interest during this period. Upon reaching the internal rate of return target, GSO’s interest will be reduced to 5 percent, while LINN’s will increase to 95 percent.
Strategic advantages for LINN:
- Allows LINN to develop assets without increasing capital intensity;
- Potential to add a steady and growing cash flow stream with no capital requirement;
- Increases LINN’s long-term ability to fund all oil and natural gas development capital and the distribution from internally generated cash flow;
- Mitigates drilling risk;
- Potentially broadens acquisition universe; and
- Upon meeting the return hurdle, provides incremental low decline production growth for LINN.
“We are extremely pleased to have finalized the agreement with GSO creating a new source of capital that will allow us to develop assets without increasing capital intensity, enhance our long-term ability to live within cash flow and provide cashless dropdowns of stable production over time,” said Mark E. Ellis, Chairman, President and Chief Executive Officer.
Financial Advisor
Jefferies LLC acted as financial advisor to LINN for the DrillCo Agreement.
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-20 U.S. independent oil and natural gas development company, with approximately 7.3 Tcfe of proved reserves in producing U.S. basins as of December 31, 2014. 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.
