Linn Energy is buying assets in the Permian Basin for $525 million, a deal meant to expand the proportion of oil production in the Houston company’s portfolio.
The West Texas properties cover 6,250 net acres, home to 124 online oil and natural gas wells that are expected to pump about 4,800 barrels of oil equivalent per day over the next 12 months. Oil makes up 63 percent of the land’s daily production.
The deal is expected to bolster Linn’s operations throughout the Permian Basin, where the Houston company produced 84 million cubic feet of gas equivalent per day in the second quarter of 2013. That’s roughly 11 percent of the acquisition and development company’s daily production in that three-month period, according to regulatory filings.
The deal is slated to close in the fourth quarter.
“This acquisition increases our exposure to oil and adds more than 300 proved low-risk infill drilling opportunities as well as future waterflood potential,” Mark Ellis, Linn’s chairman, president and chief executive said in a written statement.
Linn said the Permian Basin properties house about 30 million barrels of oil equivalent in proved reserves, and 70 percent of that is oil.
The company did not disclose the seller, but said it would pay for the deal with $500 million in debt.
The announcement comes a day after the company’s stock jumped on news that Linn’s $2.5 billion acquisition of Berry Petroleum, a deal that also expands its Permian Basin footprint, was moving forward with regulators.