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Houston-based LINN leaves Texas shale

Houston company last year took on California assets from Exxon Mobil.

By Daniel J. Graeber

HOUSTON, July 7 (UPI) -- Struggling LINN Energy said it was selling its stake in a Texas shale basin while simultaneously brokering capital investment deals to fund future developments.

LINN said it signed a deal to sell its remaining 6,400 net acres in the Permian shale basin in Texas to an undisclosed buyer for $281 million. The company said the acreage yields an average 2,000 barrels of oil equivalent per day from around 133 wells.

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Permian production increased 58 percent from 2007 to reach 1.35 million barrels per day last year, which represents 18 percent of total U.S. crude oil production. The low price of crude oil, still struggling to break through $60 per barrel, has forced many companies to cut staff levels and spending on production from even the most lucrative basins.

Exxon Mobil under the terms of a non-monetary exchange with LINN received 17,000 net acres in the Permian basin in exchange for 500 acres at its Belridge field in California last year.

LINN said it would examine 300 potential future drilling locations in a California basin it estimated held approximately 27 million barrels of oil equivalent. The Houston-based company said in a statement its mission is to "maximize cash flow" from what it described as "long-life oil and natural gas assets."

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Separately, the company said it reached two independent deals with capital investment group GSO Capital Partners and Quantum Energy Partners to provide a combined $1.5 billion for future oil and natural gas developments.

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