Linn Energy emerges from bankruptcy as two private corporations

One of the largest businesses to fall into bankruptcy during the oil bust, Houston’s Linn Energy emerged from bankruptcy Tuesday as two separate private companies.

Linn said it exited its bankruptcy restructuring with plans to sell much of its acreage in South Texas and West Texas’ Permian Basin. Linn and Berry Petroleum will operate as separate companies. Linn bought Denver-based Berry for $4.3 billion in 2013, creating one of the largest independent energy producers near the height of the oil boom. The deal, and others, burdened Linn with what would prove to be overwhelming debt.

At the time, Linn was a darling of Wall Street growing as a tax-advantaged master limited partnership that made it easier to expand. In May though, Linn filed for the largest MLP bankruptcy ever with $8.3 billion in debt. Overall, Linn counts as one of the largest of at least 240 oil and gas bankruptcies in North America — more than half of which were Texas based — during the two-year oil bust and its aftermath.

Mark Ellis took over as chief executive of Linn in 2011 and he will remain president and CEO of the new Linn. He’ll also sit on the new Linn board of directors. Ellis was awarded larger bonus payout targets from Linn last year just three months before the bankruptcy filing. It’s investors were left with almost nothing, although some are seeking damages in court. The creditors received ownership in the new companies.

Linn said Tuesday its debt load is down to about $1 billion. Ellis, in a prepared statement, touted Linn’s “foundation for future success.”

Linn’s presentation Tuesday touts its growth opportunities, specifically in burgeoning shale plays in Oklahoma. Linn also cited strong potential in East Texas and the Rockies.

However, Linn plans sell nearly 250,000 net acres of assets, including 130,000 acres in gassy South Texas and 90,000 acres in the oily Permian. Another 20,000 acres on the sales block are in North Dakota.

 

 

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