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Quick Update Note...

After the close, Permian Basin pure-play E&P Athlon Energy (ATHL) announced a significant asset acquisition in the Permian, and it looks to be the best comp transaction to the assets that LINN Energy (LINE, LNCO) is trying to swap/sell to date. 

Details:

  • 5 privately-negotiated transactions
  • Combined cash purchase price: $873MM
  • 23,500 net acres in Martin, Upton, Glasscock, and Andrews County (Hz. Wolfcamp play)
  • 4,800 boe/d of current production, 67% oil
  • 1P reserves: 31 MMboe; PD reserves: 12.1 MMboe (39%)
  • 100% operated, 97% WI, 73% NRI

As far as we can tell, none of the acreage was acquired from LINN, though much of the acquired acreage looks very proximate to LINN and legacy ATHL’s positions (maps below).  That’s somewhat strange to us – LINN is actively marketing acreage in ATHL’s backyard, but ATHL acquires acreage from 5 other private parties instead…  One would’ve thought that ATHL would be in the running for some or all of LINN’s acreage.  Maybe ATHL has an appetite for more acreage, maybe not...  Or maybe LINN’s price was too high...  ATHL hosts a conference call tomorrow AM to discuss the transaction, perhaps we get more color then.

At $75,000/boe/d or $30/proved developed boe (reasonable metrics for the production/PDPs), the acreage goes for ~$21,800/net acre.

Putting LINN’s entire Permian package on these same metrics values the production (17,000 boe/d) at $1.3B, the acreage (55,000 net acres) at $1.3B, and $2.6B in total.

We think those numbers are in-line with the whispers out there - the rumor we heard today is that LINN management thinks they can sell/swap the entire package for $2B - $4B.  Still, this ATHL deal will likely be bullish for LINE/LNCO in the immediate term, as this deal gives some credence to the bull case, flawed as it may be.

ATHL Permian Acreage:

ATHL Permian Deal a Good Mark for LINN - linn1

Source: ATHL Presentation

 

LINN Permian Acreage:

ATHL Permian Deal a Good Mark for LINN - linn2 

Source: LINN Presentation

Kevin Kaiser

Managing Director