LINN Energy has plans to sell its interest in properties located in the San Joaquin Basin in California to an undisclosed buyer for a contract price of $263 million.
The California properties, located in Kern County, consist of approximately 500 total net acres in the South Belridge Field. First-quarter net production was approximately 3,000 BOE/d, proved developed reserves of ~11.7 MMBOEand proved developed PV-10 of approximately $168 million. LINN Energy forecasts full-year adjusted EBITDAX associated with these properties of approximately $30 million. In the second half of the year, the company had budgeted $21 million of capital for the development of these properties. This capital will be redeployed for the development of growth projects or used to further de-lever the balance sheet.
The transaction is expected to close no later than July 31, 2017, with an effective date of March 1, 2017.
This sale represents the first executed agreement of the company’s noncore divestiture program. LINN continues to market the previously announced noncore asset sales and there remains significant interest in each of those packages.
Year-to-date, LINN Energy announced sale agreements with contract prices totaling $844.5 million with net proceeds expected to be used to reduce outstanding borrowings under the company’s revolving credit facility and term loan. Pro forma for these transactions, LINN Energy expects to have less than $50 million in total debt outstanding.