ExxonMobil, Linn to make second asset exchange this year
ExxonMobil Corp. has agreed to trade interest in 500 net acres from South Belridge field near Bakersfield, Calif., to Linn Energy LLC, Houston, in exchange for 17,800 net acres encompassing the Permian basin in Texas and Delaware basin in New Mexico. The transaction, effective June 1, is expected to close in the fourth quarter.
The package received by ExxonMobil is comprised of 17,000 net acres in the Midland basin core area of west Texas and 800 net acres in the Delaware basin. The company says the Midland acreage is most prospective for horizontal Wolfcamp and Spraberry development, and is producing 4,700 boe/d with 19 million boe in proved reserves.
Both acreage positions will be operated and developed by XTO Energy Inc., Fort Worth. The deal expands XTO’s leasehold position across the Permian to more than 1.5 million acres and net production to more than 95,000 boe/d.
“Our operated acreage position in the Midland basin Wolfcamp core is now around 120,000 net acres,” said Randy Cleveland, XTO president. “We continue to increase drilling activity in the play, currently operating six horizontal rigs, and are very encouraged by initial well results.”
Linn will receive interest in ExxonMobil’s Hill Property in South Belridge. It’s producing 3,400 boe/d, 100% of which is oil, with a shallow base decline of 10%. Proved reserves are estimated at 27 million boe, 51% of which is developed.
Linn says it has identified significant upside potential through optimization projects, increased steam injection, and extensive down spacing from more than 300 future drilling locations. The company estimates total resource potential for the property at 67 million boe, 100% of which is oil.
“Our California team has done an excellent job this year of growing Diatomite production and managing our legacy fields,” said Mark E. Ellis, Linn chairman, president, and chief executive officer.
Following closing of the deal, Linn will have 10,000 boe/d in production and 13,000 net acres remaining in the Midland that is prospective for horizontal Wolfcamp drilling. Ellis noted that the company continues to “see strong interest in the market for a trade or sale of these remaining assets.”
The transaction is the second nonmonetary exchange agreement between the two companies this year. In May, ExxonMobil added nearly 26,000 acres in the Permian while Linn received a portion of ExxonMobil’s interest in the Hugoton gas field in Kansas and Oklahoma (OGJ Online, May 21, 2014).
