“Linn, Citizen form Roan Resources”
Linn Energy Inc. has signed an agreement with Citizen Energy II LLC in which Linn and Citizen will each contribute certain upstream assets in Oklahoma to a newly formed company, Roan Resources LLC, focused on the accelerated development of the Merge/SCOOP/STACK play in the Anadarko Basin. Pro forma for the combination, Roan will have approximately 140,000 total net acres forming a core, largely contiguous position with Linn and Citizen each contributing approximately 70,000 net acres. In exchange for their respective contributions, LINN and Citizen will equally split the equity interest in Roan. The contributed properties include acreage in the following eight Oklahoma counties: Canadian, Carter, Cleveland, Garvin, Grady, Kingfisher, McClain, and Stephens. The combined entity is expected to have no outstanding debt at closing and intends to establish a new revolving credit facility secured by its own assets. Linn and Citizen are currently operating a combined total of five rigs in the Merge with plans to drill 58 gross wells combined in 2017. Combined production was more than 20,000 boe/d as of May 2017 and at current rig pace is forecast to have an exit rate of more than 40,000 boe/d by the end of 2017. The companies anticipaate an initial public offering in early 2018, subject to market conditions. Linn retains its majority operated position of approximately 105,000 net acres in the NW STACK and its Chisholm Trail midstream business, including a 250 MMcf/d capacity cryogenic plant currently under construction, and the Linn contributed acreage in the agreement remains dedicated to Chisholm Trail. Roan will have independent management and a separate board of directors comprised of four LINN designated directors, four Citizen designated directors and a to-be-appointed CEO who will be jointly designated by Linn and Citizen. Roan is actively recruiting an executive management team with a focus on accelerating development materially over the next 18 months. This transaction is expected to close by the end of the third quarter. Jefferies LLC acted as sole financial advisor, and Latham & Watkins LLP acted as legal advisor, to Linn for the transaction. Citigroup acted as sole financial advisor, and Thompson & Knight LLP acted as legal advisor to Citizen for the transaction.