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By Tanya Rutledge
Special to the Houston Chronicle
Linn Energy last year logged more than $1.5 bil- lion worth of acquisitions, which helped boost the oil and natural gas company’s bottom line.
Linn grew annual revenue to $1.6 billion, a 110 percent increase over the year before. That meant Linn could vie for more significant assets.
And it did just that. Its most high-profile deal was a $555 million purchase of Plains Exploration & Production Co.’s assets in the Granite Wash play, which runs from the Texas Panhandle eastward into southwestern Oklahoma. The deal doubled its inventory of horizontal drilling prospects in the area, which Linn says generates some of the highest rates of return in the U.S.
Also significant were deals marking Linn’s entry into the Williston Basin of North Dakota.
Linn also grew internally, mostly by developing interests in the Granite Wash play and the Permian Basin, ultimately logging record organic production growth of 30 percent.
“Things were hitting on all cylinders for us last year in that we were delivering on capital projects with organic growth, and we were in a position to acquire new mature assets to add to the mix,” said Mark Ellis, Linn’s chairman, president and CEO.
Spurred by the revenue bump and by a more than 400 percent growth in earnings per share, Linn landed at No. 9 on the Chronicle 100 list of the area’s public companies. It wasn’t on the list last year.
Ellis pointed out that Linn, which has almost 300 employees in Houston and 1,000 companywide, raised its quarterly cash distribution by 5 percent for the third year in a row.
“As you create investor confidence in the business, you create momentum. Then you get lower yields, which lowers the cost of capital, which makes you more competitive,” he said. “We’ve perfected this cycle, and it’s a great cycle to be in.”
Contributing to the upward swing was a production rate of 369 million cubic feet of natural gas per day in 2011, up from 265 million cubic feet per day in 2010. This year, the number is expected to exceed 600 million cubic feet per day.
Linn generates about half its revenue from oil, 40 percent from natural gas and 10 percent from natural gas liquids.
Linn’s acquisition bent continues this year. As of mid-May, Linn had closed on $1.8 billion in deals, nearly reaching its year-end goal of $2 billion in deals.
“We’re well on pace to blow through that,” Ellis said.
Rutledge is a freelance reporter.