Moody's revises outlook for Linn Energy
NEW YORK (AP) — Moody's Investors Service on Friday affirmed its "B1" corporate family rating for Linn Energy LLC, but revised the outlook for the oil and gas company to "Developing" from "Negative," pointing to its plans to buy Berry Petroleum Co. for stock worth about $2.5 billion.
Linn said Thursday that the deal will boost its presence in California, the Permian Basin, Texas and the Rockies and increase its production by 30 percent. Its estimated proved reserves will be increased by 34 percent.
As part of the deal, a Linn affiliate will issue 1.25 shares for each outstanding Berry share. That values Denver-based Berry's stock at almost $46.24 per share, a 19.8 percent premium to Berry's closing price the day before the deal was announced. The deal also includes the assumption of $1.7 billion in debt.
Moody's also placed all of its ratings for Berry under review for possible downgrade.
The ratings service said its revised outlook for Linn reflects the benefit of the addition of Berry's size, scale and low-decline, liquids-focused assets. But it added that Linn's aggressive pace of acquisitions boosts the risks related to the company.
Meanwhile, Berry's ratings review reflects its acquisition by a company with lower credit ratings and higher debt, Moody's said.
In afternoon trading, Linn shares rose 83 cents to $38.51, while Berry shares rose $1.06 cents, or 2 percent, to $47.08.