Houston-based Linn Energy was one of the largest businesses to go bankrupt during the oil bust, as of Tuesday it has emerged from bankruptcy as two separate private companies.
Linn said it left bankruptcy with plans to sell most of its acreage in South Texas and West Texas’ Permian Basin. Linn and Berry Petroleum will operate as two separate entities. Linn purchased Denver-based Berry for $4.3 billion back in 2013, this created one of the largest independent energy producers near the height of the oil boom. The deal, amongst others, burdened Linn with what ended up being a great amount of debt.
At the time, Linn was thriving in Wall Street, growing as a tax-advantaged master limited partnership that made it easier to expand. However, in May, Linn filed for the largest MLP bankruptcy ever with $8.3 billion in debt. Linn counts as one of the largest of at least 240 oil and gas bankruptcies in North America — more than have were Texas based — during the two-year oil bust and its aftermath.
In 2011 Mark Ellis took over as chief executive of Linn and he will continue on as president and CEO of the new Linn. He will be a member of the Linn board of directors. Ellis was given a more generous bonus payout target from Linn last year, just three months before the bankruptcy filing. It’s investors were left with next to nothing, but some are seeking damages in court. The creditors received ownership in the new companies.
On Tuesday Linn said its debt is down to about $1 billion. In a prepared statement, Ellis touted Linn’s “foundation for future success.”
Linn’s presentation foreshadowed its growth opportunities, specifically in burgeoning shale plays in Oklahoma. Linn also cited strong potential in East Texas and the Rockies.
But, Linn plans to sell almost 250,000 net acres of assets, including 130,000 aces in gassy South Texas, and 90,000 acres in the oily Permian. Another 20,000 in North Dakota have the potential to be sold as well.
Article written by HEI contributor Lydia Ezeakor.