Linn Energy Inc. agreed May 2 to sell natural gas assets in the Jonah and Pinedale fields in Wyoming to Jonah Energy LLC, carving away about 1% of Linn’s massive 2.6 million acre portfolio.

While Linn is actively marketing areas in several states, the Wyoming assets were not among its announced divestiture candidates and may speak to the company’s focus on its Oklahoma assets.

Jonah Energy, based in Denver, will purchase about 27,500 net acres—about 80% of which is undeveloped—including 16,000 in the Jonah and Pinedale Anticline, for $581.5 million, the companies said. The acquisition includes Linn’s interests in more than 1,200 producing wells. Jonah operates more than half of the acquired wells.

“This transaction significantly expands our footprint at an attractive valuation while leveraging the concentrated and efficient nature of our operations,” said Tom Hart, Jonah’s CEO. “With the addition of these assets, we will operate the vast majority of acreage and production in one of the most prolific natural gas fields in North America.”

Hart said the assets have seen minimal investment over the past several years. Linn has drilled and completed 68 vertical wells and participated in three horizontal wells on the Jonah acreage. In early 2017, Linn, based in Houston, said it planned to invest about $30 million in the area.

Mark E. Ellis, Linn’s president and CEO, said the sale will allow the company to reduce leverage and improve financial flexibility. In addition, the company will redirect about $16 million in capex earmarked for the second half of 2017 to growth projects or further deleveraging.

“We are aggressively pursuing higher return opportunities in the Scoop/Stack/Merge Play where we are increasing rig activity and building out our midstream business,” Ellis said. “In addition, we are pursuing other emerging horizontal plays in the Midcontinent, Rockies, North Louisiana and East Texas.”

Jonah Energy said it will acquire production that averaged 150 million cubic feet equivalent per day (MMcfe/d) in 2016.

The acquisition will solidify Jonah Energy’s position as one of the largest private natural gas producers in the country. The company expects full-year 2017 EBITDA from the assets to exceed $100 million as production growth replaces historical declines.

Jonah Energy expects to begin development activity on the acquired assets during the second half of 2017, with three rigs planned by early 2018.

Jonah will finance the acquisition with a combination of equity from the company’s existing investor group and borrowings under its credit facility, which will be expanded in connection with the transaction.

For Linn, the sale is a step toward further debt reduction, though not in the direction it indicated in February when it exited from bankruptcy reorganization. The company has transformed from an MLP with assets scattered across the Lower 48 to an E&P company intent on exploiting its Oklahoma Merge assets in western Oklahoma and other areas.

In February, the company announced that it engaged Jefferies LLC as lead adviser to explore and market five noncore assets in California, the Williston and Permian basins, South Texas and the Salt Creek Field in the Powder River Basin.

RBC Richardson Barr, CIBC Griffis & Small and Tudor, Pickering, Holt & Co. are also advising on the sales.

The Jonah sale marks the first step toward moving Linn from a conventional production-based MLP to a streamlined growth-oriented enterprise, said Evan Lederman, Linn board chairman.

“This plan includes continuing the previously announced sale of noncore assets, accelerating investment in key horizontal growth plays and focusing on our overall cost structure to become a best-in-class low-cost operator,” he said.

The Jonah Field sale is expected to close in the second quarter of 2017 with an effective date of March 1. Jefferies acted as Linn’s sole financial adviser and Kirkland & Ellis LLP as legal counsel during the transaction.

Jonah Energy’s financial adviser is Evercore Group LLC and its legal advisor is Vinson & Elkins LLP.

Darren Barbee can be reached at dbarbee@hartenergy.com.