Athlon Energy’s shopping spree may bode well for Linn Energy sale/swap

|About: Athlon Energy Inc. (ATHL)|By:, SA News Editor

Athlon Energy's (ATHL -2.7%) recent agreement to buy 23K-plus acres of Midland Basin property could be good news for Linn Energy (LINE -2.3%), according to Citigroup analysts.

LINE has ~55K Midland net acres that are on the selling block, and Citi says it may be able to acquire $2B-plus in mature producing properties in exchange for its Permian assets, based on the ATHL transactions; a sale/swap of LINE's Permian properties and a subsequent investment of proceeds into MLP-suitable assets should lower the overall decline rate of the partnership’s asset portfolio.

Yet Citi still rates the stock Neutral because it believes Linn will need another large equity financed acquisition or an equity offering to get closer to the targeted 3x leverage.