Linn Energy LLC late Monday said it plans to pay Loews Corp. subsidiary HighMount Exploration & Production LLC $330 million to acquire natural gas properties in the Antrim Shale of northern Michigan.
The properties are 99% weighted to gas and now have 1,350 operated wells that currently produce 30 MMcfe/d net. Proved reserves total more than 266 Bcfe and are 85% proved developed. The reserve life of the properties is about 24 years, and the decline rate is about 6%. Linn estimated that the properties have about 300 proved drilling opportunities. The acquisition is scheduled to close by April 30.
“We believe that the activity level of the acquisition market has dramatically increased in recent months,” said Linn CEO Mark E. Ellis. “We expect the robust acquisition market to accelerate throughout the remainder of 2010, and the transactions we announced [Monday] will position us to capture opportunities as they become available.”
HighMount was formed in 2007 as a subsidiary after Loews acquired some of Dominion’s onshore assets (see Daily GPI, Feb. 10, 2009; June 5, 2007). Besides the Antrim assets, HighMount has gas-weighted property in the Permian Basin of Texas and the Black Warrior Basin of Alabama. It claims to have 3.5 Tcfe of proved, probable and possible natural gas reserves.
Combining the Antrim properties “with our high rate-of-return horizontal drilling program in the Granite Wash area and oil-focused projects in the Permian Basin balances our portfolio of opportunities moving forward,” Ellis said. Linn at year-end 2009 had an estimated 1.7 Tcfe of proved reserves in producing U.S. basins.
To partially fund the acquisition, Linn plans to make a public offering of 12 million units of its limited liability company interests. In connection with the offering, Linn has granted its underwriters a 30-day option to purchase up to an additional 1.8 million units. The Houston-based producer also has received commitments to amend its revolving credit facility. The amendment would provide a $1.5 billion facility with a $1.5 billion borrowing base and extend the facility’s maturity to March 2015.
©Copyright 2010Intelligence Press Inc. All rights reserved. The preceding news reportmay not be republished or redistributed, in whole or in part, in anyform, without prior written consent of Intelligence Press, Inc.
© 2020 Natural Gas Intelligence. All rights reserved.
ISSN © 1532-1231 | ISSN © 2577-9877 |