Linn Energy LLC said Monday it plans to acquire a 40% interest in oil and gas properties from two privately held companies -- Tulsa-based Panther Energy Company LLC and Perryton, TX-based Red Willow Mid-Continent LLC -- as it looks to expand in the Anadarko Basin and capitalize on Panther's expertise in horizontal drilling.
The deal is valued at $220 million on land totaling 140,000 gross acres (44,000 net acres) in the liquids-rich Cleveland play. The properties are in Ochiltree and Lipscomb counties, TX, in the Texas Panhandle, and in neighboring Ellis County, OK.
"It's a new area for us and we are excited about it," Linn spokesperson Paula Beasley told NGI's Shale Daily on Monday, adding that the company's horizontal drilling program in the nearby Granite Wash play "has been very successful. We've been focused on liquids-rich properties at this point because they are doing well in the current commodity market."
Net production from the properties is estimated at about 2,700 boe/d from about 170 producing wells, while proved reserves are about 10 million boe (45% oil and 37% proved developed).
The Southern Ute Growth Fund (SUGF) is the majority owner and funding partner of Panther and the parent company of Red Willow.
"[Panther] are experts in horizontal drilling and that's why Linn entered into this deal with them," SUGF operating director Bob Zahradnik told NGI's Shale Daily on Monday. "One of the reasons we sold part of this interest is that we've had some real successes in the deepwater [Gulf of Mexico] and there are going to be a lot of big bills to hook those wells up and get them on production, so we needed to raise a little capital."
The deal is expected to close by June 1.