LINN Energy to sell California properties for $100m

US-based exploration and production company LINN Energy has signed an agreement to sell its interest in California properties to an undisclosed buyer for $100m, as part of its business transformation plan.

The properties comprise around 2,000 net acres in the Brea-Olinda Field and are located in Orange County and Los Angeles.

The agreement has a provision for an additional $7m payment, subject to the satisfaction of certain operational requirements within one year.

The first quarter net production of these assets was about 1,900 barrels of oil equivalent a day, while proved developed reserves are projected to be around 17.6 million barrels of oil equivalent with a proved developed present value discounted at 10% per annum of approximately $126m.

The company forecasts full-year field level cash flow of around $21m in connection with these properties.

LINN Energy board of directors chairman Evan Lederman said: "The sale of our Brea assets completes our strategic exit from California. 

“Given the regulatory and operational complexities, the board of directors determined it is in the best interests of the company to exit California and use the asset sale proceeds for more attractive and value maximising initiatives."

The transaction is subject to satisfactory completion of title and environmental due diligence, as well as the satisfaction of closing conditions and is expected to complete by the end of next month.

LINN intends to use the sale proceeds to improve its balance sheet and to fund its share repurchase programme.

With the latest divestment, the company’s asset sales announced year-to-date is more than $1bn compared to a total proved developed PV-10 of approximately $717m.

LINN Energy president and CEO Mark Ellis said: “The company continues its transformative business plan by accelerating investment in key horizontal growth plays, focusing on operational efficiency and marketing the remaining non-core assets."

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Image: With the proposed sale of Brea assets, LINN Energy will exit from California. Photo: courtesy of LINN Energy.