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Linn Goes Debt-Free, Plans Additional Divestitures Before Year's End

Linn Energy Inc. said it has eliminated all of its outstanding debt after selling more than $1.5 billion in assets so far this year, and plans to conduct additional divestitures in the Permian Basin, Utah and Oklahoma before the end of the year.

On Tuesday, the Houston-based company said pro forma for pending transactions, it expects to have more than $430 million in cash on hand and is "actively evaluating ways to return capital to its shareholders." Meanwhile, a share buyback program has been increased to $400 million, and about 5.2 million shares were repurchased by the end of October.

Last month, Linn announced the sale of about 20,000 net acres in the Williston Basin, spread across Montana, North Dakota and South Dakota, to an undisclosed buyer for $285 million. It also agreed to sell 163,000 net acres in the Washakie field in Wyoming to an unidentified buyer for $200 million. Both deals are expected to close in the fourth quarter.

"With the closing of the Williston and Washakie transactions, we anticipate a sizeable cash balance and are actively evaluating ways to return capital to our shareholders," said Chairman Evan Lederman.

Linn is marketing its remaining assets in the Permian, along with mature waterfloods in Oklahoma. It also plans to sell its interest in the Altamont Bluebell Field and the Drunkards Wash Field, both in Utah. The company also has negotiated a $500 million credit facility.

Third quarter production averaged 586 MMcfe/d, a 27.6% decline from the year-ago quarter (809 MMcfe/d). The company estimated fourth quarter production will be 472-507 MMcfe/d, while full-year production is forecast at 620-645 MMcfe/d.

During the third quarter, Linn drilled and completed two horizontal wells in Ruston, LA, with one well targeting the Lower Red zone of the Cotton Valley Sands Terryville Complex, and the other targeting the Upper Red zone.

The Lower Red well, its first test of the formation, had a choke-managed 24-hour initial production (IP) rate of 12.7 MMcf/d, and a peak IP rate over 30 days (IP-30) of 11 MMcf/d. Meanwhile, the Upper Red well represented Linn's third test of zone and recorded a choke-managed 24-hour IP rate of 20.4 MMcf/d and a peak IP-30 rate of 19.4 MMcf/d.

Roan Resources LLC, which Linn formed with Citizen Energy II LLC last June to focus on the Anadarko Basin, reported average production of about 23,500 boe/d net in September and is operating five rigs. Roan had "accelerated its pace of activity" in the basin by adding a fourth hydraulic fracturing crew, with plans to add a sixth rig before the end of the year.

Net income was $137.1 million ($1.56/share) in 3Q2017, compared with a year-ago net loss of $198.4 million (minus 56 cents). Total revenues declined 11.3% year/year to $236.7 million.

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