LinnCo LLC (LNCO), Berry Petroleum Company (BRY): A Closer Look at One of Linn Energy LLC (LINE)’s Potential Hidden Assets

Photo credit: LINN Energy

Linn Energy LLC (NASDAQ:LINE)’s transformational deal with the help of affiliate LinnCo LLC (NASDAQ:LNCO) to acquire Berry Petroleum Company (NYSE:BRY) is currently being held up by the SEC. While the delay has investors nervous, it could very well be worth the wait for more than just the immediate addition of oil rich cash flows. That’s because Berry Petroleum Company (NYSE:BRY) has a hidden asset tucked away that could become a nice little gem for Linn Energy LLC (NASDAQ:LINE) in the future.

As of the end of last year Berry Petroleum Company (NYSE:BRY) held just over 6,700 net acres in California. One of the main reasons why Linn Energy LLC (NASDAQ:LINE) wants to buy Berry Petroleum Company (NYSE:BRY) is because of the current production of its California assets. However, the fact that most of these acres overlay the prospective Monterey Shale could make the deal all that more valuable to LINN in the future if it’s successfully able to bring Berry Petroleum Company (NYSE:BRY) into the fold. That means California could really turn out to be quite the hidden gem for Linn Energy LLC (NASDAQ:LINE) investors.

While it’s true Berry’s portion of the Monterey is tiny – the entire play runs over 1,752 square miles – the sheer amount of oil in place makes it a potentially huge resource. For example, according to Energy Information Agency estimates, each well in the Monterey could ultimately produce 550,000 barrels of oil. Given the 16 wells per square mile spacing that the EIA used for its analysis, it suggests that Berry Petroleum Company (NYSE:BRY) could drill around 160 wells on its acreage as it has about ten square miles of leased land. While that might not sound like a lot of wells, it does represent the potential for 88.0 million barrels of oil, which would be a nice addition to Berry’s current California proved reserves which are 127 million barrels of oil equivalent.