History
Linn Energy grew through debt-funded acquisitions from its 2006 listing, collapsed into bankruptcy in 2016, re-emerged, and ended as Roan Resources, bought by Citizen Energy in 2019.
2006-2008: Going public and building the roll-up
Linn Energy went public in 2006 and soon ran into filing problems. In April 2006 its audit committee found errors in how it had accounted for acquisitions in 2003 and 2004, forcing a restatement and a late annual report. Nasdaq warned twice that the units could be delisted, over the missing annual report and then a late first-quarter report. The 2005 report was filed on May 31, 2006, and lenders granted a 30-day waiver.
Then came the strategy that defined the company: buy producing properties and pay with debt and new units. In July 2006 it agreed to buy fields in California for $291 million and Oklahoma assets for $125 million, and in August it replaced its credit facility with a new $800 million agreement to fund them. In October it raised $305 million from a private placement of units, and in December it announced $454 million of further purchases. A $260 million placement followed in June 2007, and in July 2007 it agreed to buy Dominion Resources' Mid-Continent properties for $2.05 billion, backed by a $1.5 billion unit placement. Another $552 million purchase followed in December 2007.
In 2008 it began selling assets: its Appalachian position for $600 million, Oklahoma properties for $185 million and deep Woodford Shale rights for $229 million. It also sold $255.9 million of 9.875% senior notes due 2018.
2009-2012: Back to buying, bigger than before
In 2009 capital markets reopened, though at a higher price. Linn sold $250 million of notes at 11.75% and 5.5 million units at $16.25. Acquisitions resumed in December with a $154.5 million purchase.
In 2010 it agreed to buy Michigan gas properties for about $330 million and Permian Basin properties for $305 million, and sold $1.3 billion and then $1 billion of notes. In 2011 its credit agreement carried a $2.5 billion borrowing base, and a $750 million note sale at 6.5% funded a $220 million purchase. A Granite Wash acquisition from Plains Exploration closed for about $530 million.
In 2012 it bought two properties from BP America, Hugoton for $1.2 billion and Jonah Field for $1.025 billion, funding the first with $1.8 billion of 6.25% notes.
2013-2015: The high-water mark and the turn
In 2013 Linn agreed to a $525 million Permian purchase paid for with a term loan, and in December completed the acquisition of Berry Petroleum through LinnCo. Units on issue reached about 330 million by year end.
In 2014 it bought assets from Devon Energy for about $2.24 billion, refinanced with $1.1 billion of notes, then sold its Granite Wash and Cleveland position for roughly $1.8 billion, repaying its $1.3 billion term loan.
By 2015 the picture had darkened. In May it sold 16 million units at $11.79, about a third of the $35-38 prices of 2011-12. It brought in Quantum Energy Partners as a $1 billion equity-commitment partner, agreed to sell Howard County Permian assets for about $281 million, and learned its $4.05 billion borrowing base would drop to $3.6 billion on January 1, 2016 unless it issued at least $250 million of junior lien debt and completed the Berry consolidation steps. In November it swapped about $2.0 billion of unsecured notes for about $1.0 billion of new 12% second-lien notes, a distressed exchange.
2016-2017: Bankruptcy
In April 2016 Linn amended its credit agreement to avoid defaults until May 11 and received a Nasdaq notice for trading below $1.00. LinnCo offered to swap Linn units for its own shares, which Linn's board neither backed nor opposed. On May 11, 2016, Linn, LinnCo and Berry Petroleum filed for Chapter 11. Nasdaq announced it would delist the units, and Linn did not appeal. The LinnCo offer closed on August 1 with about 35% of units tendered, leaving LinnCo with about 71%. In October a revised restructuring agreement was signed with second-lien and unsecured noteholders.
The court confirmed the plan on January 27, 2017. All 355,032,380 existing units were to be cancelled, new stock went to second-lien and unsecured noteholders, and lenders were to be repaid in full. That explains the fall in units on issue to about 84 million at the end of 2017.
2017-2019: Roan and the end
As Linn Energy, Inc., the company sold assets to cut debt: western Wyoming wells for $581.5 million, San Joaquin Basin acreage for $263 million and Washakie Field assets for $200 million. In September 2017 it closed a 50/50 joint venture, Roan Resources LLC, with Citizen Energy, contributing about 70,000 net Anadarko Basin acres. In December it announced a tender offer for at least $250 million of its stock, a plan to split into three companies, and a $400 million buyback, under which about 5.6 million shares had been bought for about $194 million by November 30. The beats do not show the outcome of the tender.
In August 2018 it spun off Riviera Resources, holding only its 50% Roan stake, and in September became Roan Resources, Inc. In June 2019 it secured a $100 million term loan from affiliates of major shareholders and issued them 1.5 million shares for $1,525.
On October 1, 2019, Roan agreed to be bought by Citizen Energy Operating for $1.52 per share in cash. Holders of about 77% of shares had signed voting agreements, and a final proxy filed on November 4 set a vote for December 4. As of October 1, 2019, 154,333,746 Class A shares were outstanding, and the vote was pending.
Written from the 81 story beats below (2006 to 18 Dec 2019), which come from the company's own announcements and filings.