Linn Energy LLC has agreed to acquire Midcontinent oil and gas properties primarily in the Granite Wash of Texas and Oklahoma from Plains Exploration & Production Co. (PXP) for $600 million.

The assets being acquired have net production of about 80 MMcf/d of high-Btu gas, Linn said. Estimated proved reserves at the end of last year were 263 Bcfe, about 90% weighted to gas. "Linn estimates proved reserves will be significantly higher at year-end 2011," the company said. The deal also gives Linn more than 200 low-risk infill drilling locations and about 20,000 Granite Wash net acres and about 75,000 net acres outside the Granite Wash.

"This acquisition represents substantially all of Plains' assets in the Midcontinent region, including mature stable assets and an outstanding position in the Granite Wash," said Linn CEO Mark Ellis. "This transaction will double Linn's current inventory of horizontal drilling locations to more than 400 in the Granite Wash. We expect to yield significant operational efficiencies in the Granite Wash as we leverage our pad drilling techniques, simultaneous-operations processes and recently built gas gathering and water handling infrastructure."

Linn said the acquisition is "highly accretive," doubles its inventory of Granite Wash drilling locations and increases its current production from the play by about 75%.

The final price is subject to conditions of closing, which is expected by Dec. 31. Linn said it will pay for the assets from cash flow and borrowings.

Last May Linn agreed to a $220 million deal to acquire a 40% interest in properties from Panther Energy Co. LLC and Red Willow Mid-Continent LLC to expand in the Anadarko Basin (see Shale Daily, May 11). Earlier this year Linn agreed to pay $196 million to Concho Resources to acquire oil properties in the Bakken play in North Dakota (see Shale Daily, March 3).