LINN Energy to buy BP's Hugoton holdings for $1.2 billion
LINN Energy LLC, Houston, will acquire BP America Production Co.’s in giant Hugoton field in southwestern Kansas for $1.2 billion with closing by Mar. 30.
The properties are producing 110 MMcfd of gas equivalent, 37% natural gas liquids, from 730 bcfe of proved reserves. The properties are 98% operated and include full ownership of the 450 MMcfd Jayhawk natural gas processing plant, whose throughput has been about half of capacity (OGJ, June 6, 2011, p. 88).
Hugoton is the largest US conventional gas field in terms of ultimate recovery, and the BP properties have a 7% decline rate and 18-year reserve life, LINN Energy said.
The properties are 81% proved developed producing with 2,400 operated wells on more than 600,000 contiguous net acres and more than 800 future drilling locations. Estimated 2012 maintenance capital is $30-40 million.
LINN Energy pointed out that it is fully hedged for 5 years for 100% of its natural gas production and 68% of NGL production, utilizing natural gas puts.
Alan Petzet | Chief Editor Exploration
Alan Petzet is Chief Editor-Exploration of Oil & Gas Journal in Houston. He is editor of the Weekly E&D Newsletter, emailed to OGJ subscribers, and a regular contributor to the OGJ Online subscriber website.
Petzet joined OGJ in 1981 after 13 years in the Tulsa World business-oil department. He was named OGJ Exploration Editor in 1990. A native of Tulsa, he has a BA in journalism from the University of Tulsa.
