A partnership of KKR Natural Resources (KKR) and Fleur de Lis Energy (FDL), Dallas, has agreed to acquire certain oil and gas properties in Ector and Midland Counties in West Texas’s Permian basin from Linn Energy LLC for $350 million. The deal is expected to close in the fourth quarter.
The assets are comprised of more than 7,200 contiguous acres producing from multiple hydrocarbon-rich zones, including the Strawn, Spraberry, and Wolfcamp formations. FDL estimates fourth-quarter production of more than 5,200 boe/d—the majority of which is oil—and sees an attractive inventory of near-term development opportunities.
“This field has an extensive geologic column consisting of multiple producing horizons within the Permian basin,” commented Porter Trimble, FDL founder and chief executive officer. “This will allow the FDL team to access over 33 million boe of long life reserves.”
KKR and FDL reported their partnership in March. The partnership’s first investment took place in July, when it acquired Selma Chalk properties from Penn Virginia Corp.
Linn reshuffling assets
Last week, Linn also divested $1.95 billion in oil and gas properties and related midstream assets in the western Anadarko basin to a joint venture of startup FourPoint Energy LLC and privately held institutional affiliates of EnerVest Ltd. (OGJ Online, Oct. 3, 2014).
Linn expects proceeds from the sales to finance the company’s $2.3 billion acquisition of assets from Devon Energy Corp., which closed in August (OGJ Online, June 30, 2014).
“One of our goals for 2014 was to maximize value for our Midland basin and Granite Wash assets in order to reduce the capital intensity and decline rate within our portfolio,” said Mark E. Ellis, Linn chairman, president, and chief executive officer, adding, “We believe today’s announcements largely accomplish this goal.”
The company has made two asset exchanges with ExxonMobil Corp. this year, the latter of which was agreed upon in September and involved Linn giving up its Permian acreage (OGJ Online, Sept. 19, 2014). That month, Linn also completed its purchase of Hugoton field assets in Kansas from Pioneer Natural Resources Co. (OGJ Online, Sept. 11, 2014).
