LINN Energy, LLC
LINE, LinnCo, LLC LNCO and Berry Petroleum Company
BRY today announced the signing of a definitive merger agreement
pursuant to which LINN and LinnCo will acquire all of Berry's outstanding
shares for total consideration of $4.3 billion, including the assumption of
debt. The transaction, which is structured as a stock-for-stock merger of
Berry with LinnCo followed by the acquisition of the Berry assets by LINN, is
expected to be tax-free to Berry shareholders. This transaction represents the
first ever acquisition of a public C-Corp by an upstream LLC or MLP.
Operational Highlights
* Berry's long-life, low-decline, mature assets are an excellent fit for an
MLP/LLC;
* Meaningful growth to LINN's portfolio with increased geographic presence
in California, the Permian Basin, East Texas, and the Rockies, as well as
the addition of an attractive new core area in the Uinta Basin;
* Production of approximately 240 MMcfe/d, increasing LINN's current
production by 30 percent;
* Berry's reserves are approximately 75 percent oil, which results in a
meaningful increase in liquids exposure to 54 percent from 46 percent of
proved reserves, pro forma as of December 31, 2012;
* Proved reserves of approximately 1.65 Tcfe, increasing LINN's estimated
proved reserves by 34 percent;
* LINN has identified additional probable and possible reserves at Berry of
approximately 3.8 Tcfe;
* Approximately 3,200 producing wells and more than 200,000 net acres; and
* Potential for production optimization and cost savings.
Financial Highlights
* The transaction is expected to be highly accretive to distributable cash
flow per unit. In the first full year following closing, accretion is
expected to be in excess of $0.40 per unit.
* LINN plans to recommend to its board of directors an increase in the
current quarterly distribution of 6.2 percent. LINN's current quarterly
distribution of $0.725 per unit, or $2.90 per year, would increase to
$0.77 per unit, or $3.08 per year. The recommended increase is anticipated
to take effect in the quarter immediately following the closing of the
transaction, which is estimated to occur on or before June 30, 2013.
* LinnCo's current estimated annual dividend of $2.84 per share includes a
reduction of $0.06 per share for taxes, which LinnCo now estimates to be
zero for 2013. Therefore, management estimates that the LinnCo dividend
per share for the quarter ended March 31, 2013 will increase 2 percent
from $0.71 to $0.725 per quarter, or $2.90 per share on an annual basis.
* LinnCo's management intends to recommend to its board an increase in
LinnCo's dividend by 8.5 percent following the closing of the transaction
to $3.08 per share on an annualized basis, which includes the $0.18 per
share increase in LINN distributions.
* Due to the significant accretion expected from this transaction, LINN's
coverage ratio for the second half of 2013, assuming the transaction
closes on or before June 30, 2013, is expected to be approximately 1.20x
including the anticipated distribution and dividend increases.
* All stock consideration and greatly increased size are expected to result
in significantly improved debt metrics.
* As part of the transaction, Berry will be converted into a limited
liability company and then it will be contributed to LINN in exchange for
LINN units. This arrangement allows LINN to own Berry's assets in a
pass-through entity without any immediate payment of tax.
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