BUYING U.S. ASSETS
Houston-based Linn Energy has teamed up with private equity firm Quantum Energy for a $1 billion asset purchase plan.
Quantum has agreed to initially commit up to $1 billion of equity capital to fund acquisitions and development of oil and natural gas assets, Linn said Tuesday.
Linn will be able to participate in all acquisition opportunities with a direct working interest ranging from 15 percent to 50 percent.
The partnership will be focused on conventional and unconventional resource development opportunities across the United States.
The acquired assets will be managed by Linn in exchange for a reimbursement of general and administrative expenses.
Linn will also be able to earn a promoted interest in the assets after certain investor return hurdles are met.
The partnership could yield more than $2.5 billion of acquisition and development funding when the $1 billion equity commitment is combined with the ability to leverage the jointly acquired assets and Linn's acquisition of a direct working interest.
The agreement also provides for potential future commitments of equity capital from Houston-based Quantum that would increase the total size of the joint acquisitions.
"As the founding investor in Linn and a leading private capital provider to the energy sector that also participated in the formation of two other upstream MLPs, Quantum is uniquely qualified for this new acquisition alliance," Linn chairman, president and CEO Mark E. Eliis said.
Linn said the deal will create multiple strategic advantages including creating a "drop-down" entity to purchase and harvest on an ongoing basis and enhancing the company's ability to "capture acquisition opportunities during distressed market conditions."
The partnership will have five directors on its board with Quantum and its representatives holing three seats and Linn holding two seats.
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IEA - For the third consecutive year, global energy investment declined, to USD 1.8 trillion (United States dollars) in 2017 – a fall of 2% in real terms. The power generation sector accounted for most of this decline, due to fewer additions of coal, hydro and nuclear power capacity, which more than offset increased investment in solar photovoltaics.
EIA - Crude oil production from the major US onshore regions is forecast to increase 143,000 b/d month-over-month in July from 7,327 to 7,470 thousand barrels/day , gas production to increase 1,066 million cubic feet/day from 69,466 to 70,532 million cubic feet/day .
U.S. FRB - Industrial production rose 0.6 percent in June after declining 0.5 percent in May. For the second quarter as a whole, industrial production advanced at an annual rate of 6.0 percent, its third consecutive quarterly increase. Manufacturing output moved up 0.8 percent in June.
U.S. DT - The sum total in May of all net foreign acquisitions of long-term securities, short-term U.S. securities, and banking flows was a net TIC inflow of $69.9 billion. Of this, net foreign private inflows were $58.8 billion, and net foreign official inflows were $11.1 billion.