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Ohio Utica Shale

Linn Energy offers details on $2.3 billion Devon purchase

By Bob Downing Published: June 30, 2014

From Linn Energy today:

HOUSTON, June 30, 2014 (GLOBE NEWSWIRE) -- LINN Energy, LLC (Nasdaq:LINE) ("LINN" or "the Company") and LinnCo, LLC (Nasdaq:LNCO) ("LinnCo") announced today that LINN has signed a definitive agreement to acquire assets in five U.S. operating areas from Devon Energy Corporation (NYSE:DVN) ("Devon") for $2.3 billion. The assets are currently producing approximately 275 MMcfe/d, approximately 80 percent of which is natural gas, with a shallow base decline of approximately 14 percent. Total proved reserves are estimated to be between 1.3-1.5 Tcfe (approximately 75 percent PDP) with total resource potential of approximately 3 Tcfe. The asset package is comprised of approximately 900,000 net acres across the Rockies, Mid-Continent, east Texas, north Louisiana and south Texas regions with approximately 4,500 total wells. LINN has identified over 1,000 future drilling locations and over 600 recompletion opportunities. LINN's acquisition of Devon assets is intended to be financed ultimately through the sale of its Granite Wash assets and other non-producing acreage in LINN's portfolio. Potential excess proceeds from the sale of assets, if any, will be used initially to reduce debt and for general corporate purposes.


LinnCo logo


"Early in 2014, we outlined four keys to success at LINN: realize value for the Midland Basin position; continue to make accretive acquisitions; reduce capital intensity while increasing efficiency; and improve credit metrics," said Mark E. Ellis, Chairman, President and Chief Executive Officer. "We believe today's announcement is a positive development in achieving these objectives. As we enter into the second half of the year, we remain committed to these important goals."

Sale of Granite Wash Assets

LINN plans to sell its position in the Granite Wash and Cleveland plays located in the Texas Panhandle and western Oklahoma. Currently, LINN is operating four drilling rigs in the area and producing 230 MMcfe/d of liquids-rich natural gas. LINN's talented team has successfully tested and developed 17 horizontal intervals, including shallow oil, liquids-rich Granite Wash and deep Atoka natural gas. As a result of this delineation, LINN has catalogued significant drilling inventory over its approximately 147,000 net acre position. LINN first began horizontally drilling the Granite Wash in 2010 and has grown production in this prolific area from 65 MMcfe/d to its current rate. To support this growth, the Company developed a substantial integrated network of infrastructure including midstream and water handling facilities which is capable of and recently handled a larger rig program.

Significant benefits from the acquisition of Devon assets and the planned sale of LINN assets:

  • Reinforce LINN's mission of developing mature, long-life oil and natural gas properties;
  • Lower decline rate and reduce capital intensity;
  • Tax efficient upon successful completion of 1031 like-kind exchange;
  • Meaningful additions to the Company's Rockies and Mid-Continent positions;
  • Accretive to excess of net cash provided by operating activities after distributions to unitholders;
  • Credit positive from increased steady stream of predictable cash flow, production and reserves.

Interim Financing

LINN has secured $2.3 billion of committed interim financing for the acquisition of Devon assets, subject to final documentation. The financing was lead arranged by Scotiabank and included Barclays, RBC Capital Markets and Wells Fargo.

The transaction with Devon is subject to satisfactory completion of title and environmental due diligence, as well as the satisfaction of closing conditions. The transaction is expected to close in the third quarter of 2014 with an effective date of April 1, 2014.

Supplemental information regarding the acquisition of Devon assets is posted at


Scotia Waterous acted as the exclusive financial advisor to LINN during this transaction.


LINN Energy's mission is to acquire, develop and maximize cash flow from a growing portfolio of long-life oil and natural gas assets. LINN Energy is a top-15 U.S. independent oil and natural gas development company, with approximately 8 Tcfe of proved reserves (pro forma for announced 2014 trade and acquisition) in producing U.S. basins as of December 31, 2013. More information about LINN Energy is available at


LinnCo was created to enhance LINN Energy's ability to raise additional equity capital to execute on its acquisition and growth strategy. LinnCo is a Delaware limited liability company that has elected to be taxed as a corporation for United States federal income tax purposes, and accordingly its shareholders will receive a Form 1099 in respect of any dividends paid by LinnCo. More information about LinnCo is available at



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