LINN Energy, LLC announced a joint-venture agreement with an affiliate of Anadarko Petroleum Corporation, whereby LINN will participate as a partner in the CO2 enhanced oil recovery development of the Salt Creek field, located in the Powder River Basin of Wyoming. Anadarko assigned LINN 23 percent of its interest in the field in exchange for future funding of $400 million of Anadarko's development costs. Over the next three to six years, LINN expects to invest a total of $600 million, which includes the $400 million of Anadarko's costs and $200 million net to LINN's assigned interest. Anadarko has been utilizing CO2 to develop this field since 2004 with outstanding results, and additional development associated with this joint venture is expected to double current production by 2015. The agreement was signed and closed April 3, 2012.
"We are excited about this opportunity to partner with Anadarko in the Salt Creek field, where Anadarko has successfully implemented world-class CO2 enhanced oil recovery facilities and infrastructure to increase production," said Mark E. Ellis, Chairman, President and Chief Executive Officer. "We believe this long-life asset is unique because it is expected to deliver 10 years of steady production growth while, at the same time, providing a low base-decline rate. In addition, CO2 can potentially be used to enhance recovery in other reservoirs and portions of the field.
"Consistent with our strategy, we have already hedged all of the current net production associated with this joint venture through 2014, and we believe it will be immediately accretive to distributable cash flow per unit," added Ellis. "We also expect to greatly benefit from the knowledge we will gain by partnering with Anadarko, which has extensive experience in CO2 and enhanced oil recovery operations. We believe we have the potential to apply this knowledge and technology to several of our existing legacy oil fields."
Significant characteristics expected from the joint venture:
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