Linn Energy Inc., Houston, has agreed to sell its interest in properties in the San Joaquin basin of California to an undisclosed buyer for $263 million.
The properties consist of 500 total net acres in South Belridge field in Kern County, producing from the Tulare and Diatomite formations using waterflood and thermal enhanced oil recovery methods at 800-2,000 ft. First-quarter net production was 3,000 boe/d, with proved developed reserves of 11.7 million boe as of Mar. 1 at updated pricing of $3/MMbtu gas and $50/bbl oil.
The deal is effective Mar. 1 and expected to close no later than July 31. Linn for now is keeping its properties at Brea Olinda field of the Los Angeles basin.
Linn had budgeted $21 million of capital for second-half development of the San Joaquin properties, but it instead will be used for development of growth projects or paying down debt. The firm in 2016 made no material investments in its California assets.
The San Joaquin sale is the first executed agreement of Linn’s noncore divestiture program. After it emerged from bankruptcy earlier this year, the firm said it would market 3,000 net acres in California, 5,000 in Salt Creek, 20,000 in the Williston, 90,000 in the Permian, and 130,000 in South Texas.
Earlier this month, Linn agreed to sell 27,500 total net acres in Wyoming—80% of which is undeveloped—including 16,000 net acres in the Jonah and Pinedale Anticline fields to Denver-based Jonah Energy LLC for $581.5 million (OGJ Online, May 2, 2017).
Net proceeds from the $844.5 million in sales agreements so far this year are expected to be used to reduce outstanding borrowings under Linn's revolving credit facility and term loan. Pro-forma for the deals, the firm expects to have less than $50 million in total debt outstanding.
Contact Matt Zborowski at [email protected].