Berry Petroleum sale valued at $4.9 billion

A Denver-based oil and gas company with western Colorado assets has agreed to merge with Houston-based LINN Energy in a $4.9 billion transaction.

That’s an increase from the $4.3 billion sale value Berry Petroleum Co., LINN Energy and the affiliated LinnCo LLC initially settled on when the proposed merger first was announced in February. Mark E. Ellis, LINN Energy chairman, president and chief executive officer, explained that since the merger talks began, Berry’s operations “have consistently outperformed expectations.”

The deal includes some 2,850 producing wells and interests in more than 200,000 acres.

Berry acquired Piceance Basin interests in 2006. Its oil and gas holdings in the Piceance now cover some 10,600 acres north of Parachute, and it was producing an average of 16 million cubic feet of natural gas per day in the basin as of the final quarter of 2012. It isn’t currently drilling locally.

Berry also has holdings in California, Texas and in northeast Utah’s Uinta Basin. The merger would boost LINN Energy’s portfolio through an increased geographic presence in California, Texas and the Rockies, “as well as the addition of an attractive new core area in the Uinta Basin.”

Under the amended sale terms, LinnCo will issue 1.68 common shares of its stock for every common share of Berry, up from 1.25 shares in the originally announced deal. LINN Energy will then acquire the Berry assets from LinnCo.

The sale value includes assumption of debt.

The merger would create one of the largest independent oil and gas companies in North America with production of more than 1 billion cubic feet equivalent per day and proved reserves of about 6 trillion cubic feet equivalent, and 54 percent of those reserves consisting of liquids.

This summer, LINN Energy and LinnCo said they’d been notified by the Securities and Exchange Commission that it had begun a private, informal inquiry into the two companies, with topics including the proposed Berry merger and the companies’ hedging strategy. LINN Energy and LinnCo said they remained committed to completing the merger.

Berry’s stock closed Monday up 6 percent from its previous closing price. LINN Energy’s stock rose 3 percent.


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