Linn Energy raises Berry Petroleum merger price by $600 mn

US independent hydrocarbon company Linn Energy this week said it would raise the price of its all stock deal to buy Berry Petroleum Co by $600 million since its stock price has fallen from the time the merger was announced.

Linn Energy had in February said that it would buy Berry Petroleum Co in a $4.3-billion all-stock deal including debt, in order to raise production by 30 per cent. (See: Linn Energy to buy Berry Petroleum for $4.3 billion)

Under the terms of the deal that was agreed to by the board of both companies, Linn Energy was to issue 1.25 common shares for each common share of Berry, a 19.8 per cent premium to the stock's closing price of $38.59 on 20 February.

Shares of LinnCo, a holding company set up by Linn for acquisitions, has fallen by 10 per cent, while Berry shares have risen 26 per cent since the deal was announced on 21 February.

Under the amended terms of the agreement, Berry shareholders will receive 1.68 LinnCo shares for each share they hold taking the total deal value to $4.9 billion, including the assumption of debt.

In a joint statement, Mark  Ellis, chairman, president and CEO of Linn Energy, and Robert Heinemann, president and CEO of Berry, said, "The boards and management teams of Linn and Berry remain committed to completing this merger. We continue to believe that, upon completion, this transaction will create tremendous value for Linn Energy, LinnCo and Berry investors."

As part of the agreement, both companies have agreed to extend the date after which any party may terminate the pending merger agreement to 31 January 2014, from 31 October 2013.

Denver-based Berry Petroleum is a publicly traded independent oil and natural gas production and exploitation company with operations in California, Texas, Utah, and Colorado.

The acquisition will give Houston-based Linn Energy more than 200,000 net acres and around 200 producing wells in the West and mid-West containing 75 per cent oil, proven reserves of approximately 1.65 Tcfe and additional probable and possible reserves of approximately 3.8 Tcfe.

The deal will increase Linn's current production by 30 per cent and proven reserves by 34 per cent.

Linn Energy is one of the15 top US independent oil and natural gas development company with a growing portfolio of long-life oil and natural gas assets.