Linn Energy LLC (NASDAQ:LINE)’s stock skyrocketed on Wednesday, climbing over three dollars in a single day to close at $27.88. Some analysts argued that it was a market reaction over speculation concerning the merger with Berry Petroleum Company (NYSE:BRY), announced the past February. But the company surprised the market with a new statement yesterday.
Source: Tejas Minerals Royalty
Linn Energy LLC (NASDAQ:LINE) has announced through its website the acquisition of new property in the Permian Basin worth $525 million. “This bolt-on acquisition in the Permian Basin is an attractive addition to our assets in the area. This acquisition increases our exposure to oil and adds more than 300 proved low-risk infill drilling opportunities as well as future waterflood potential,” said Mark E. Ellis, Chairman, President and Chief Executive Officer. The acquisition is said to be accomplished during the fourth quarter, and will be financed with a “committed $500 million senior secured term loan with certain participants in its lender group and borrowings under its revolving credit facility”.
The new acquisition has proven reserves of 30 million Boe, is expected to produce 48,00 Boe/d at its most productive wells, while keeping operating costs relatively low at $15 per Boe. The reserves to production ratio is calculated to be around 17 years, expecting 70% of those reserves to be oil. More, Linn Energy LLC (NASDAQ:LINE) calculates that an extra 24 million Boe can be recovered through waterflood-based enhanced techniques.
The move comes as a complement to February´s announcement for the acquisition of Berry Petroleum Company (NYSE:BRY). The $4.3 billion transaction –including debt- is pending US Securities and Exchange Commission’s approval. The vote in Linn Energy LLC (NASDAQ:LINE), LinnCo LLC (NASDAQ:LNCO), and Berry Petroleum Company (NYSE:BRY) is set for September 30th. Also, the SEC requested additional information in order to arrive at the voting date with no legal impediments to complete the transaction.
In the end, Linn Energy LLC (NASDAQ:LINE) is recovering lost ground through acquisitions. The company is employing what has been won during times of bonanza to push up its stock. The move is sol bold that it represents the first ever acquisition of a C-corporation by a limited partnership company. Although a minor detail, it is the reason behind so much speculation concerning the SEC’s actions and yesterday’s stock hike concerning the request for additional information.
Disclosure: Jodor Jalit holds no position in any of the stocks mentioned