Linn, Quantum to form acquisition venture
Linn Energy LLC and Quantum Energy Partners, both of Houston, are forging a new link to fund acquisition and development of oil and gas properties.
Linn, affiliate LinnCo LLC, and Quantum Energy have signed a nonbinding letter of intent under which Quantum initially will commit up to $1 billion of equity capital to an alliance named QL Energy I LLC (AcqCo).
Linn will be able to participate in all acquisitions with a direct working interest of 15-50%. It will manage AcqCo interests in exchange for reimbursement of general and administrative expenses and be able to earn a promoted interest in AcqCo after achievement of investment targets. Linn also will have the right of first offer to acquire AcqCo assets to be sold.
The firms said the deal will create potential acquisition funding of more than $2.5 billion. The agreement allows future commitments of equity capital from Quantum.
Quantum, a private capital investor, formed Linn Energy in 2003. Linn became a publicly traded master limited partnership in 2006. It holds reserves totaling 7.3 tcf of gas equivalent in core areas that include the Rocky Mountains, Midcontinent, Hugoton basin, California, Permian basin, Michigan, Illinois, and East Texas.