Linn Energy LLC agreed to acquire US Midcontinent oil and natural gas assets from Plains Exploration & Production Co. for $600 million. The acquisition will double Linn’s inventory of Granite Wash horizontal drilling sites in Texas and Oklahoma to more than 400.
Separately, Plains also agreed to sell South Texas conventional gas properties to another party for $185 million. Plains did not identify the South Texas buyer. Previously, Plains sold some Gulf of Mexico assets in an ongoing strategy to reduce debt (OGJ Online, Sept. 20, 2010).
Linn Energy expects its acquisition from Plains to close yearend, subject to meeting certain conditions. The deal, which involves more than 200 low-risk infill drilling locations, covers 20,000 Granite Wash net acres and 75,000 net acres outside the Granite Wash.
Mark E. Ellis, Linn president and chief executive officer, said, “We expect to yield significant operational efficiencies in the Granite Wash as we leverage our pad drilling techniques, simultaneous-operations processes, and recently built gas gathering and water handling infrastructure.”
Linn is acquiring net production of 80 MMcfd of gas equivalent and will boost its proved reserves significantly upon closing. Plains estimated proved reserves at Dec. 31, 2010, at 263 bcf equivalent of which 90% was gas.