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Oil & Gas Financial Journal

XTO Energy Inc. has entered into a definitive agreement to acquire producing properties, leasehold acreage, and infrastructure from Linn Energy LLC for $600 million. The purchase includes 152,000 net acres of Marcellus Shale leasehold in western Pennsylvania and West Virginia.

XTO Energy's internal engineers estimate proved reserves on the properties to be 145 billion cubic feet equivalent (bcfe), from the shallow Mississippian and Devonian reservoirs. Upon closing, the acquisition will add 25 million net cubic feet of natural gas equivalent (MMcfe) per day to the company's growing production base. The pipeline and gathering infrastructure included in the purchase is valued at about $50 million.

Bob R. Simpson, chairman and CEO of XTO stated, "The expansive leasehold is anchored in the right locations, where we anticipate prolific shale potential. The producing properties generate free cash flow which we will deploy in our shale development campaign. Also, the operational team already in place brings the experience, expertise and manpower to support XTO's long-term commitment to the basin."

Michael C. Linn, chairman and CEO of Linn Energy said, " A delineation of opportunities in the Marcellus will take time and successful exploration and development will require significant capital investment. We believe that monetizing our Appalachian assets has created significant value for our unitholders and that the sale represents full value for our Marcellus acreage and Appalachian proved reserves."

Linn Energy will use proceeds to reduce indebtedness under its credit facility.

The acquisition is scheduled to close on or before July 1, 2008. Closing is subject to customary closing conditions.

Funding is expected to be provided through a combination of cash flow, commercial paper, and other borrowings.

Lehman Brothers Inc. acted as financial advisor to Linn Energy and conducted a multi-party auction process for this transaction.

Seadrill, Petrobras sign $4.1B rig deal

Seadrill and Petrobras have signed an unconditional letter of award for contracts with a total revenue potential of nearly $4.1 billion over 18 rig years for three newbuild deepwater units.

Upon execution, these new contracts will increase Seadrill's backlog to roughly $12 billion.

The three separate drilling rig contracts' terms and potential revenues are:

West Eminence
The rig will be delivered during the fourth quarter 2008 and start-up of operations offshore Brazil is scheduled for the first quarter 2009.

Contract duration is six years, and contractual water depth is 2,400 meters. Including mobilization fee and performance bonus, the total revenue potential is $1.35 billion.

West Taurus
The rig is scheduled to be delivered during the fourth quarter 2008, and start-up of operations offshore Brazil is scheduled for the first quarter 2009.

Contract duration is six years, and contractual water depth is 2,400 meters. Including mobilization fee and performance bonus, the total revenue potential is $1.42 billion.