Linn Energy plans to sell oil and gas properties in western Wyoming for $581.5 million to Colorado producer Jonah Energy, it said Tuesday.
It’s selling off assets that produced about 129 million cubic feet of natural gas equivalent a day across 27,500 net acres, with proved reserves of 384 billion cubic feet of natural gas equivalent. The deal is expected to close in the second quarter.
The Houston company will pay off debt it borrowed under its revolving credit facility, a kind of corporate loan from which companies can borrow, repay and borrow again.
Linn said if it didn’t sell off the property, it only would have spent $16 million developing the properties further this year. It said it expected cash flow from the properties to be $60 million this year.
Now, Linn said, it will spend that money on more lucrative assets in Oklahoma’s SCOOP and STACK play and other plays in the Rockies, North Louisiana and East Texas.;
In a statement, Linn Chairman Evan Lederman said the deal marks the first step toward changing Linn from a “conventional production-based” Master Limited Partnership – a tax-advantaged corporate structure – to a “streamlined growth-oriented enterprise.”