Making Sense of LINN Energy LLC's Big Trade

 

Photo credit: LINN Energy

LINN Energy (NASDAQ: LINE  ) and LinnCo (NASDAQ: LNCO  ) announced the first trade involving LINN Energy's acreage in the Permian Basin. LINN Energy is trading 25,000 net acres in Texas' Midland Basin, as well as 1,000 net acres in New Mexico to ExxonMobil (NYSE: XOM  ) for 500,000 net acres in the Hugoton Field of Kansas. 

There are a lot of moving parts to this deal. LINN Energy and LinnCo are shipping out acreage that's prospective for oil-rich horizontal drilling as well as some current production to ExxonMobil for natural gas assets. At the same time LINN Energy is keeping some of the production from the acreage it's sending to ExxonMobil. Needless to say there is some complexity here that makes the deal a bit tougher to understand.

To help investors gain a better understanding of the transaction I've created the following slideshow. The presentation will break apart the deal so that investors can gain a better understanding on what LINN Energy and LinnCo are gaining and losing in the deal with ExxonMobil as well as what the deal means for the future of LINN Energy.

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  • Report this Comment On May 26, 2014, at 10:43 AM, mike48025 wrote:

    I really like these slide shows that Matt uses. They are so much easier to understand than the film clip presentations in so many articles. Thanks Matt!! MH

  • Report this Comment On May 26, 2014, at 12:00 PM, zorro6204 wrote:

    Yes, nice work on the graphics. That production holdback is a curious feature, as is the New Mexico add-in. I'm guessing that once they had an overall deal, to pull it off as an actual swap rather than a deferred exchange required them to do some fine tuning! I wonder how that production deal works?

    As rip pointed out on the SA boards, there's a big problem right now in Kansas with the lesser prairie chicken designation. Presumably LINE management factored that in, per-well costs are said to be uneconomic.

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