Linn Energy announced their third Permian Basin property acquisition for $305 million. The price is valued at $109,000 per flowing barrel and $17.00 per proved Boe. It appears that Linn has purchased the properties at a premium to recent Permian Basin acquisitions. We believe this is due to the upside potential of the Wolfberry play. Linn has the potential for approximately 125 probable Wolfberry drilling locations.
Raymond James has reiterated their Outperform rating for Linn as they believe that Linn is capitalizing on opportunity including upside potential in the Wolfberry play.
This is another example of a company paying a large sum for Wolfberry play exposure. Each acquisition draws more attention to the Wolfberry play and Lynden Energy Corp.’s (LVL) terrific opportunity. It’s possible that LVL could be an acquisition target at some point in the future depending upon their success in the Wolfberry.