Linn Energy to buy oil and natural gas assets in Permian Basin for $525 mn

US independent oil and gas company Linn Energy yesterday said it would buy oil and natural gas assets in the Permian Basin in West Texas and southeast New Mexico, for $525 million.

The Houston-based company did not reveal the seller's identity.

Linn Energy, one the most acquisitive US oil companies, is buying 124 producing wells on more than 6,250 net acres in the Permian Basin. These wells produce about 4,800 barrels of oil equivalent per day.

These assets have proven reserves of 30 million barrels of oil, expected to have a production life for the next 17 years. They also have the potential of potential of increasing reserves by 24 MMBoe by using the waterflood oil recovery technique.

The acquisition will add to Linn Energy's production equivalent to 4,800 barrels of oil a day in the first year.

Linn Energy intends to finance the acquisition with proceeds from a committed $500 million senior secured term loan with certain participants in its lender group and borrowings under its revolving credit facility.

"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 Ellis, chairman, president and CEO of Linn Energy. "We expect this transaction will be immediately accretive to cash available for distribution.''

Linn Energy is one of the15 top US independent oil and natural gas development company with a growing portfolio of long-life oil and natural gas assets.

Last year the company acquired Pinedale Field operations in Wyoming from British oil giant BP Plc for $1.03 billion, and oil and gas properties in the Hugoton Basin area of southwestern Kansas, for $1.2 billion.

In February it agreed to buy Berry Petroleum Co in a $4.3-billion all-stock deal including debt, in order to raise production by 30 per cent.