Linn Energy has signed a definitive purchase agreement to acquire certain oil and gas properties located primarily in the Mid-Continent from Lamamco Drilling Company for a contract price of $552 million, subject to purchase price adjustments.
The Company anticipates the acquisition will close in early 2008 and will be financed with a combination of borrowings under its existing revolving credit facility and proceeds from a committed term loan facility to be entered into at closing. Linn Energy expects that the acquisition will be immediately accretive to distributable cash flow per unit and does not anticipate issuing equity to finance this transaction.
"This transaction enhances value through significantly increased oil exposure, which we believe creates very attractive margins in the current commodity price environment," said Michael C. Linn, Chairman and Chief Executive Officer of Linn Energy. "These assets are a natural fit for Linn Energy. The reserves are approximately 88% oil and over 70% proved developed with a low base decline rate of approximately 5% and a long reserve life index in excess of 34 years. This acquisition also provides an inventory of optimization and development projects which will create numerous future organic growth opportunities."
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