NEWS

Linn Energy announced a 53% YoY reduction in its planned 2015 capex budget to $730 million from approximately $1.55 billion in 2014. The company expects to produce 1.1 – 1.2 MMcfe/d (48% liquids). The company added that the reduction in capex is approximately half in response to lower commodity prices and half as a result of divestiture of Granite Wash assets and the majority of its Midland Basin assets, and reduced investment in other areas.

Mark E. Ellis, Chairman, President and CEO, said: “After careful consideration, Linn's senior management proposed and the Board of Directors approved a 2015 budget that contemplates a significantly lower current crude oil price than in 2014.”

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Linn Energy signed a non-binding LoI with GSO Capital Partners LP, which is part of the Blackstone Group LP, to raise up to $500 million with 5-year availability to fund drilling programs.

According to the agreement, GSO will fund 100% of the costs associated with new wells drilled and is expected to receive an 85% WI in these wells until it achieves a 15% internal rate of return on annual groupings of wells. Linn is expected to receive a 15% carried working interest during this period. Upon reaching the internal rate of return target, GSO's interest will be reduced to 5%, while LINN's will increase to 95%.

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Linn Mulls Sale of Granite Wash Assets in Texas

Linn Energy plans to sell its position in the Granite Wash and Cleveland plays located in the Texas Panhandle and western Oklahoma.

The company currently operates four drilling rigs in the area and producing 230 MMcfe/d of liquids-rich natural gas. Linn has successfully tested and developed 17 horizontal intervals, including shallow oil, liquids-rich Granite Wash and deep Atoka natural gas. As a result of this delineation, the company has catalogued significant drilling inventory over its approximately 147,000 net acre position.

Linn first began horizontal drilling operations in the Granite Wash play in 2010 and has grown production from 65 MMcfe/d to its current rate.

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Linn Energy reported average production of 796 MMcfe/d in Q1-2013, up 69% YoY. The increase in production is primarily attributed to the company's continued success in its acquisition program and organic growth.

Q1-2013

• Net loss of $222 million in Q1-2013 compared to 6 million in Q1-2012
• 1P reserves of 4.8 Bcfe
• Revenue of $369 million up 4% YoY

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Linn Energy has executed an amendment to the existing agreement to pump in an additional amount of $600 million to acquire all of Berry Petroleum's outstanding shares for $4.9 billion instead of $4.3 billion, as agreed earlier.

Asset highlights

• 1P reserves of approximately 1.65 Tcfe (75% oil)
• 2P reserves of approximately 3.8 Tcfe
• Production of approximately 250 MMcfe/d
• Approximately 2,850 producing wells in more than 200,000 net acres

View Linn press release