Linn Energy LLC has agreed to sell some Oklahoma acreage now producing about 12 MMcfe/d to Warburg Pincus-backed Laredo Petroleum Inc. for $185 million in cash. Linn Energy would retain the option to participate in future production.

The sale includes around 50,000 net acres in the Verden area of Oklahoma; proved reserves are estimated at 45 Bcfe. Houston-based Linn Energy would retain the option to participate in future qualifying Verden wells “after a substantial portion of the drilling risk has been mitigated,” the producer said. The effective date of the transaction is July 1; closing is expected by the end of September.

“This transaction creates an opportunity to optimize Linn Energy’s asset portfolio,” said CEO Michael C. Linn. “The Verden properties represent one of the highest-decline and highest-risk assets in our portfolio.”

The sales proceeds would be used to repay debt, but the producer also wants to “redeploy the capital into projects that will allow us to develop long-life, low-risk and low-decline properties, which are better suited to our LLC [limited liability company] structure.” Linn Energy, a master limited partnership, develops and acquires long-life properties in producing basins within the United States.

Laredo Petroleum, which concentrates its exploration and production (E&P) activities in the Midcontinent, was launched last year by veteran Tulsa oilman Randy Foutch (see Daily GPI, Aug. 1, 2007). Laredo’s initial backing was with Foutch’s long-time financial partner Warburg Pincus, which provided an initial line of equity for up to $300 million.

Foutch’s earlier E&P start-ups, Lariat Petroleum and Latigo Petroleum, also were Warburg portfolio companies. Lariat, founded in 1997, was sold in 2001 to Newfield Exploration Co. for $333 million (see Daily GPI, Jan. 2, 2001). Latigo, formed in 2002, focused on the West Texas Panhandle. It was sold in 2006 to Pogo Producing Co. for $750 million (see Daily GPI, April 18, 2006).

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