US-based upstream and midstream development company Linn Energy has signed an agreement to sell 23% interest in Salt Creek Field, Wyoming, to Denbury Resources for $71.5m.
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The sale is consistent with the company’s non-core divestiture programme and represents the second executed agreement after it successfully emerged from bankruptcy earlier this year.
As part of the agreement, Denbury Resources will acquire 5,000 net acres of the Salt Creek Field, with net production currently estimated at 2,100 barrels per day.
Denbury expects the net production for the acquired interest to increase over the next several years, with proved developed reserves estimated at nearly nine million barrels of oil equivalent and proved developed present value, discounted at 10% per year (PV-10) of around $54m.
In order to develop these properties, the company had budgeted $4m of capital for the second half of the year, which will be redeployed for the development of growth projects or to maximise shareholder returns.
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By GlobalDataLinn Energy CEO Mark Ellis and Chairman Evan Lederman said: "The Salt Creek sale marks a milestone in the ongoing transformation of Linn from a highly levered production-based MLP to a streamlined growth-oriented enterprise.
“Pro-forma following the closing of the Jonah, South Belridge and Salt Creek asset sales, the company will have extinguished all remaining outstanding debt.”
During the current year, Linn Energy announced sale agreements worth $916m.
The company plans to use sales proceeds to reduce outstanding borrowings, which stand at $8.4bn at the end of 2015.
The company’s restructuring plan includes the sale of the remaining non-core assets, accelerating investment in key horizontal growth plays and focusing on overall cost structure.
Subject to satisfactory completion of title and environmental due diligence, as well as closing conditions, the closure of the transaction is expected in the second quarter of this year.
Image: Linn Energy's facility in Wyoming. Photo: courtesy of Linn Energy.
