Linn Energy LLC, which buys older oil and natural gas fields, agreed to purchase Berry Petroleum Co. for $2.42 billion in stock to increase its proved reserves by 34 percent.
Berry shareholders will get 1.25 shares of publicly traded LinnCo LLC, a corporation whose only assets are units of Linn Energy, according to a joint statement released today. That values Berry at $46.24 a share, a 20 percent premium to yesterday’s closing price. LinnCo will sell the Berry assets toLinn Energy in exchange for additional partnership units.
Berry’s reserves are 75 percent oil, which increases Linn’s exposure to liquids, which are more profitable than natural gas. The deal is the biggest oil and gas purchase announced this year and the largest ever for Linn, according to data compiled by Bloomberg. Last year, the company announced four deals, valued at a total of $2.6 billion.
“Berry’s portfolio fits well with Linn’s structure and asset base,” Robert Heinemann chief executive officer of Denver-based Berry, said in the statement. “The combination of the two will create one of the largest independent exploration and production companies in North America.”
Linn, the first publicly traded independent oil and natural gas limited liability company, was formed in 2003 by Michael C. Linn and private-equity firm Quantum Energy Partners.
Linn will pay $4.3 billion for Berry, including the assumption of debt, the Houston-based company said.
The announcement was made before regular trading began on U.S. markets. Linn Energy rose 0.7 percent to $36.65 yesterday in New York. LinnCo fell less than 1 percent to $36.99. Berry fell 4.9 percent to $38.59.