LinnCo-BRY Merger Closed Says LINE


Independent oil and gas company, LINN Energy LLC (LINE) announced that the merger between LinnCo, LLC (LNCO) and Berry Petroleum Company has reached a successful completion. Per the agreement, all of the outstanding shares of Berry Petroleum Co. have been acquired by LinnCo.

However, in exchange for LINN Energy units, LinnCo has contributed Berry to LINE as per a contribution agreement between the two parties. After the exchange, Berry will function as Berry Petroleum Company, LLC, an indirect affiliate of LINE.

Per the terms of the agreement, LinnCo has issued a total of about 93.6 million shares – 1.68 common shares for one share of Berry. The merger was effective at the close of trading on Dec 16, with the end of trade for the Berry stock on the NYSE.  

According to LINN management, associating with Berry will be fruitful for the company keeping in view Berry’s long life and low declining asset base. LINN Energy will now have proved reserves of around 1.1 billion barrels of oil equivalent comprising 54% liquids. Moreover, the merger has added another name in North America’s list of major oil and natural gas players.

Earlier in the month, LINE provided an updated guidance for the fourth quarter and the full-year 2013. While the company reiterated the fourth quarter production guidance at 840 million cubic feet equivalent per day (MMcfe/d) to 860 MMcfe/d, it projected an increase in net cash from the zero level to 5–10% above the company's current distribution. The company restated production growth of 8–10% for full-year 2013.

Houston-based LINE currently retains a Zacks Rank #3 (Hold), implying that it is expected to perform in line with the broader U.S. equity market over the next 1 to 3 months.

Meanwhile, one can consider other better-ranked stocks in the same industry like the Zacks Ranked #1(Strong Buy) Harvest Natural Resources Inc. (HNR) and Abraxas Petroleum Corp. (AXAS).

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