Linn Energy, LinnCo to Buy Berry Petroleum for $2.5B
Linn Energy LLC, along with its former unit LinnCo LLC, has agreed to buy Berry Petroleum Co. for about $2.5 billion in stock as the oil and natural-gas developer aims to expand its geographic presence and bolster production.
Including the assumption of debt, the deal is valued at $4.3 billion.
Under the deal's terms, LinnCo--which was formerly a unit of Linn Energy before its initial public offering last year--is offering 1.25 of its shares for each share of Berry, translating into a per-share price of about $46.24 for Berry's shareholders, a 20% premium to Wednesday's close. Shares climbed 14% to $44 in light premarket trading.
Linn Energy noted Berry's long-life, low-decline, mature assets are "an excellent fit" and the acquisition will increase Linn Energy's presence in California, the Permian Basin, East Texas, and the Rockies, as well as adding an attractive new core area in the Uinta Basin.
Linn Energy also said the deal will increase its current production by 30%. Given that Berry's reserves are about 75% oil, Linn Energy said the deal results in an increase in liquids exposure to 54% from 46% of proved reserves as of the end of 2012.
"Berry's assets are an excellent fit for Linn, and we believe this transaction generates significant accretion to our distributable cash flow per unit," said Linn Energy Chief Executive Mark E. Ellis.
In the first full year following closing, accretion to distributable cash flow per unit is expected to exceed 40 cents a unit.
The company added it will recommend its board raise its quarterly distribution by 6.2% to $3.08 a year. The increase would kick in during the quarter following the deal's close, which as of now is estimated to be on or before June 30.
The acquisition is expected to be tax-free to Berry's shareholders. Berry will be converted into an LLC. The combined company will be based in Houston.
LinnCo--which has no assets or operations other than to own interest in Linn Energy--said it has incurred a deferred tax liability in connection with the deal. Linn Energy will pay LinnCo $6 million a year for three years because of the incremental costs to LinnCo resulting from this liability.
Separately Thursday, Linn Energy reported that its fourth-quarter loss narrowed as it increased average daily production 88% as compared with the year earlier.
Last year, Linn Energy agreed to pay roughly $1.03 billion to acquire properties in the Jonah Field from BP PLC's (BP, BP.LN) BP America Production Co. in a bid to increase its position in the Green River Basin of southwest Wyoming.
Linn Energy closed Wednesday at $36.65 while LinnCo closed at $36.99.
WHAT DO YOU THINK?
Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.
- ExxonMobil Racks Up Discoveries in Guyana Block Eyed by Chevron
- Oil Market Sentiment Has Improved Significantly
- EU, US Eye Collaboration on Nuclear Materials
- USA Driving Activity to Increase to All-Time Highs
- TC Energy to Sell Prince Rupert Gas Pipeline Project to First Nation
- EU Electricity Export to Ukraine Up 94 Percent in Two Years
- China Coal Output Falls for First Time since Government Ordered More
- BP Pulse Buys One of Europe's Largest Truck Stops
- UK CCUS Plans Outdated: Think Tank
- North America Enters Rig Loss Streak
- Norway Regulator Blasts Proposal to Halt New Oil and Gas Permits
- Chinese Mega Company Makes Major Oilfield Discovery
- EIA Drops 2024 Henry Hub Gas Price Forecast
- EIA and Standard Chartered Offer Up Latest Oil Price Predictions
- Red Sea Region Sees Another Watershed Incident
- Chevron Oil Project in Kazakhstan to Cost $48.5B
- OPEC Voices Encouragement after IEA Affirms Support for Oil Security
- Biden Govt Bares Strategy for Freight Charging, Hydrogen Fueling Infra
- Ukraine Hits Third Russian Refinery In Escalating Drone Strikes
- Rystad Looks at the Buzz Around White Hydrogen
- VIDEO: Missile Attack Kills Crew Transiting Gulf of Aden
- Norway Regulator Blasts Proposal to Halt New Oil and Gas Permits
- Chinese Mega Company Makes Major Oilfield Discovery
- What Is the Biggest Risk to Offshore Oil and Gas Personnel in 2024?
- Is Peak Oil Demand Close?
- Vessel Sinks in Red Sea After Missile Strike
- JP Morgan, Standard Chartered Reveal Latest Oil Price Forecasts
- Exxon Rights in Stabroek Do Not Apply to Hess Merger with Chevron: Hess
- Rystad Forecasts Net Production of Top Permian Producers in 2024
- Analysts Reveal Latest Oil Price Outlook Following OPEC+ Cut Extension