LINN Energy, Inc. (ticker: LNGG) has updated its plan to spinoff into three companies, and has provided more detail as to who will lead the branched-off companies.
Riviera Resources formed, OTC ticker RVRA
LINN Energy’s board has formed Riviera Resources, LLC. Riviera will hold the upstream assets in Hugoton, Michigan/Illinois, Arkoma, East Texas, North Louisiana, and Drunkards Wash, as well the assets of Blue Mountain Midstream LLC. Riviera will also retain more than 100,000 acres in the prospective NW STACK play.
Moving the separation of Riviera from LINN forward, the company said it intends to undertake certain internal reorganization transactions, such as the conversion of Riviera from a limited liability company to a corporation.
According to LINN, Riviera is expected to be an unlevered public company listed for trading on the OTC market under the ticker RVRA.
Roan Resources soon to be listed on NYSE or NASDAQ under ROAN
Roan Resources LLC is pure play company focused in the Merge/SCOOP/STACK play. As of February 2018, the company had a net production of 40,800 BOEPD with six active drilling rigs and two active frac fleets.
LINN Energy, Inc. will serve as a holding company solely for the equity interest of Roan Resources and the company is preparing to up list to the NYSE or NASDAQ during 2018 under the ticker ROAN. The company has also executed a term sheet with Roan Holdings, LLC (the successor to Citizen Energy II, LLC), which is expected to result in the consolidation of 100% of the equity in Roan under LINN.
Shares
Following these transactions, LINN said it expects to distribute all of the outstanding shares of common stock of Riviera, then owned by LINN, to the holders of LINN’s Class A common stock on a pro-rata basis, leaving LINN shareholders with one share of Riviera and one share of LINN. After each spinoff is completed, the consolidation of Roan (and related transactions) is expected to take place during the third quarter of this year.
“The separation will address the significant sum of the parts discount we believe is currently priced into LINN. Proforma following the separation, shareholders will have exposure to two unique companies: a pure play, high growth Merge/SCOOP/STACK company in Roan and an unlevered upstream and midstream business that generates significant free cash flow and has highly economic organic investment opportunities,” said LINN President and CEO Mark E. Ellis.
“The board and management are focused on executing this value maximizing plan for our shareholders by midsummer 2018 and expect to provide detailed financial and operational updates at or prior to the spinoff,” Ellis said.
Retirement
Mark E. Ellis, LINN’s current president and CEO, has decided to retire from LINN following the spinoff.
Additionally, the remaining management team for LINN–including Arden Walker, EVP and COO, Thomas Emmons, SVP of corporate services, Jamin McNeil, SVP of Houston division operations and Candice Wells, SVP, general counsel and corporate secretary–all plan to depart at or prior to the spinoff.
Who will lead Riviera?
Executives
David Rottino will serve as president and CEO of Riviera and as a member of the Riviera board of directors. Rottino has served as EVP and CFO of LINN since 2015 and has previously held various leadership positions at El Paso Energy, ConocoPhillips and Burlington Resources.
Dan Furbee will serve as EVP and COO of Riviera Resources. Furbee was most recently VP of business development and asset development for Sanchez Energy Corporation where he aided the company in growing and developing a significant asset base in the Eagle Ford Shale.
- Jim Frew – EVP and CFO
- Darren Schluter – EVP of finance and administration, chief accounting officer
- Holly Anderson – EVP and general counsel
Board of directors
- Evan Lederman – partner at Fir Tree Partners
- Andy Taylor – member of the investment team of Elliott Management Corporation
- Matthew Bonanno – partner at York Capital Management
- Phil Brown – partner at P. Schoenfeld Asset Management
- Greg Harper – president and CEO of Blue Mountain Midstream
“Riviera’s focus will be on the development of its growth-oriented assets and returning capital to our shareholders, all while generating significant free cash flow from our unlevered, high quality producing assets,” Rottino said.
What about Blue Mountain Midstream?
Greg Harper will serve as president and CEO of Blue Mountain Midstream. Harper was most recently president of gas pipelines and processing for Enbridge Inc., where he was responsible for all North American natural gas and natural gas liquids midstream activities. He also led all midstream activities at CenterPoint Energy and was the founding CEO of Spectra Energy Partners.
- Brad Reese will serve as EVP and chief development and corporate services officer
- David Weathers will serve as EVP and CCO
“The Blue Mountain assets, which are located in the core of a rapidly growing basin and has current significant producer dedications, provide the team a formidable foundation from which to execute our high growth strategy. We look forward to building the customer relationships, assets and market access that will further differentiate our value proposition to the shareholders,” Harper said.
Blue Mountain is constructing a 250 MMcf/d cryogenic gas processing system to expand its existing Chisholm Trail midstream business that is located in the Merge/SCOOP/STACK play.
The company said it anticipates the new plant to be operational by the end of the second quarter of 2018 and it continues to pursue additional producer dedications. Blue Mountain is currently evaluating an additional expansion of the plant to meet the forecasted growth from its dedicated acreage position of more than 80,000 net acres.
