NEW YORK (Reuters) - Linn Energy Inc and Citizen Energy II, LLC have agreed to form a joint oil and gas venture to develop 140,000 acres in Oklahoma, with the newly-created company expected to list early next year, according to a statement on Wednesday.
The venture known as Roan Resources will be provided land by the two companies, on an equal basis, in an area which stretches across the SCOOP, STACK and Merge oil-rich shale formations in south and central Oklahoma.
By forming the venture, Linn and Citizen aim to accelerate the development of the largely-contiguous acreage, with production reaching more than 40,000 barrels of oil equivalent per day by the end of the year, double the output as of May 2017, the statement said.
Technology improvements allow companies to drill sideways over a longer distance, meaning oil and gas producers have been seeking out ways to acquire adjacent land to boost production from single oil wells.
EQT Corp said last week it had agreed to buy fellow Appalachian gas and oil firm Rice Energy for $6.7 billion, a transaction that would make it the largest U.S. natural gas producer. One of its main rationales was Rice’s complementary acreage.
Roan Resources is planning an initial public offering in early 2018, subject to market conditions, the statement added.
Linn itself only returned to the public market in February, having reformed itself during a Chapter 11 process caused by the slump in oil prices from a peak in mid-2014.
It has since sold a number of assets designated as not core to its strategic plan to help raise cash to fund new opportunities, including to Jonah Energy and Denbury Resources.
Tulsa-based Citizen is focused on developing oil and gas reserves in the Anadarko basin in Oklahoma. It is backed by investment firm JVL Advisors, run by former Morgan Stanley banker John Lovoi.
Jefferies and Citigroup were the respective financial advisers to Linn and Citizen, with Latham & Watkins and Thompson & Knight their respective legal advisers.
Reporting by David French; Editing by Andrew Hay