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Linn’s Renamed Midstream Arm Blue Mountain Clinches Deal for Oklahoma Cryogenic Plant

Houston-based Linn Energy Inc., its focus now on upstream and midstream opportunities in the Midcontinent, has renamed its midstream subsidiary Blue Mountain Midstream LLC and said the unit has an agreement to build a cryogenic natural gas plant in Oklahoma.

Blue Mountain signed an engineering, procurement and construction contract with Midland, TX-based BCCK Engineering Inc. to build the Chisholm Trail Cryogenic Gas Plant. The 225 MMcf/d gas processing facility would have a total capacity of 250 MMcf/d. Construction has begun with commissioning expected by mid-2018.

"Blue Mountain has the midstream assets and capability to generate significant value for Linn shareholders," said CEO Mark Ellis. The facility "meaningfully increases our growing midstream business."

Blue Mountain's Chisholm Trail midstream business consists of about 30 miles of existing natural gas gathering pipeline and 60 MMcf/d of refrigeration capacity. Linn said the system was being expanded by another 35 miles with increased throughput.  The new cryogenic plant is going to improve the system's liquid recoveries, Linn management said.

Last month, Linn agreed to partner with privately held Tulsa-based Citizen Energy II LLC to form Roan Resources LLC, with its focus squared on the Midcontinent. Specifically, Linn and Citizen Energy agreed to split the equity interest in Roan and each contribute 70,000 net acres across eight Oklahoma counties -- Canadian, Carter, Cleveland, Garvin, Grady, Kingfisher, McClain and Stephens.

Roan's acreage overlays the Merge prospect and Oklahoma's myriad reservoirs, the South Central Oklahoma Oil Province, or SCOOP, and the STACK, better known as the Sooner Trend of the Anadarko Basin, mostly Canadian and Kingfisher counties. Linn said the new cryogenic gas plant reaffirms that the acreage contributed to Roan in June "remains dedicated to Chisholm Trail."

Linn's "dedicated acreage in the Merge and this focused investment give us a tremendous competitive advantage,” Ellis said. “Our partnership with BCCK on this construction project is an example of how our talented team will pursue potential future midstream opportunities."

Linn has been on a selling spree as of late -- both before and after it emerged from Chapter 11 in late February -- but it has retained assets in the Arkoma Basin, Wyoming's Jonah field and Washakie and Williston basins; Utah's Uinta Basin, formations in East Texas/North Louisiana, and in Oklahoma's myriad reservoirs.

After filing for bankruptcy protection as Linn Energy LLC in May 2016, the company emerged as Linn Energy Inc. following an agreement to sell a batch of assets. It also agreed to spin off Berry Petroleum Co. LLC, which it acquired in 2013 for $4.3 billion.

A trio of divestitures followed in May. Linn shed its interest in Wyoming's Salt Creek Field to Denbury Resources Inc., a carbon dioxide enhanced oil recovery specialist, for $71.5 million. That followed separate deals to sell 27,500 net acres in the Jonah field and Pinedale Anticline to Jonah Energy LLC for $581.1 million, and 500 net acres in California's South Belridge Field in the San Joaquin Basin to an undisclosed buyer for $263 million.

Last month, Linn also completed its exit from California with the sale of some properties in the Los Angeles Basin to an undisclosed buyer for $100 million.

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