Independent oil and gas company,
LINN Energy LLC
), announced that it has inked a deal worth $525 million to
purchase properties in the oil and gas abundant Permian
BERRY PETROLEUM (BRY): Free Stock Analysis
CARRIZO OIL&GAS (CRZO): Free Stock Analysis
LINN ENERGY LLC (LINE): Free Stock Analysis
RANGE RESOURCES (RRC): Free Stock Analysis
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LINN Energy expects the transaction to be complete by the fourth
quarter and contribute towards increasing its production levels.
The company plans to fund this purchase through its revolving
credit facility and a secured term loan of $500 million.
Spread over 6,250 net acres, the Permian Basin land holds
approximately 124 producing wells and 30 million barrels of oil
equivalent (MMBoe) of proved reserves. The property also has a 24
MMBoe waterflood potential.
Management believes that the acquisition will add value to the
company's existing portfolio and provide wider oil exploration
and drilling opportunities. The Permian Basin properties will add
300 proved low-risk infill drilling options and approximately
4,800 barrels of oil per day (BOE/d) for the first year to its
A day prior to this announcement, LINN Energy had declared that
it has made progress to acquire
Berry Petroleum Co.
) in a move to increase reserves and cash flow. Houston-based
LINN Energy had proposed the purchase of Berry Petroleum in
February. The closure is pending, as the U.S. Securities and
Exchange Commission probe into LINN Energy's hedging strategy is
However, the news of progress on the Berry acquisition led to a
12.8% jump in the shares of LINN Energy to $27.90 on Sep 11.
After the announcement of the Permian Basin deal, the shares rose
initially but settled at 3 cents lower than the previous day when
the market closed on Sep 12.
LINN Energy currently retains a Zacks Rank #3 (Hold), implying
that it is expected to perform in line with the broader U.S.
equity market over the next 1 to 3 months.
Meanwhile, one can consider other energy explorers such as
Range Resources Corporation
Carrizo Oil & Gas Inc.
) as good investment opportunities. Both these stocks currently
sport a Zacks Rank #1 (Strong Buy).