Jonah Energy LLC has signed a definitive agreement to acquire natural gas and oil producing properties in the Jonah and Pinedale fields and surrounding area from LINN Energy Inc. for approximately $580 million. Under the terms of the agreement, Jonah Energy will acquire LINN’s interests in over 1,200 producing wells and 27,000 net acres, of which more than 80% is currently undeveloped. More than half of the acquired wells are operated by Jonah Energy.
The acquired assets averaged over 150 million cubic feet equivalent per day (Mmcfe/day) of net production in 2016. Pro forma for the transaction, Jonah Energy will produce over 450 Mmcfe/day net from over 2,100 producing wells across over 145,000 net acres within Wyoming’s Jonah and Pinedale fields and adjacent Normally Pressured Lance (NPL) area. Jonah Energy was third-largest privately-held natural gas producer in the April OGFJ100P listing.
The transaction will be financed with a combination of equity from the company’s existing investor group and borrowings under its credit facility, which will be expanded in connection with the transaction. Jonah Energy expects to begin development activity on the acquired assets during the second half of 2017, with three rigs planned by early 2018. The company expects full year 2017 EBITDA from the assets to exceed $100 million as production growth replaces historical declines.
The transaction is expected to close in the second quarter of 2017. Jonah Energy’s financial advisor for the transaction is Evercore Group LLC, and its legal advisor is Vinson & Elkins LLP.
Jonah Energy LLC was created in the spring of 2014 with the acquisition of producing assets within the Jonah Field in Sublette County, Wyoming. Jonah Energy is one of the largest privately-held natural gas producers in the US and pursues a strategy of growth through the acquisition, development and enhancement of high-quality producing assets. In addition to ongoing development of its Jonah field assets, Jonah Energy is in the process of obtaining authorization to develop its acreage in the adjacent Normally Pressured Lance (NPL) area, which holds the potential for substantial incremental oil and natural gas reserves. The company’s investor group is led by TPG Capital LLC and includes EIG Global Energy Partners and management.