Riviera Resources Inc. is narrowing the focus of the multibasin portfolio it inherited from Linn Energy, the company said in a Dec. 11 press release.

The Houston-based independent oil and gas company, which formed through a spinoff from Linn Energy in August, said it agreed to sell its interest in properties located in the Arkoma Basin in Oklahoma to an undisclosed buyer for a contract price of $68 million.

Linn Energy, which was founded in 2003 by Michael C. Linn, had a tumultuous past couple of years beginning with a Chapter 11 bankruptcy in May 2016. Following the completion of its restructuring in February 2017, the company set out to reshape its portfolio through numerous noncore divestitures, which eclipsed $1.85 billion within a year.

Riviera Resources Upstream Asset Map (Source: Riviera Resources Inc.)

During that time, in June 2017, Linn Energy also signed an agreement with Citizen Energy II LLC, a privately-funded group based in Tulsa, Okla., to form a company focused solely in the Merge, Scoop and Stack plays in Oklahoma named Roan Resources LLC.

RELATED: Linn Energy Spinning Off Merge/Scoop/Stack E&P

At the time of its formation, Roan’s asset consisted of 140,000 net acres in the heart of the Oklahoma shale plays, 70,000 net acres of which were contributed by Linn. Both Linn and Citizen Energy hold 50% stakes in the company.

In April 2018, Linn Energy announced its intentions to spin off its remaining portfolio of mature, low-decline assets located throughout the U.S. to newly-formed Riviera Resources. Linn retained its 50% stake in Roan as part of the separation agreement.

Through its spinoff from Linn, Riviera added a portfolio of producing properties in the Northwest Stack play, the Hugoton Basin, East Texas, North Louisiana, Michigan/Illinois and the Uinta Basin as well as the Arkoma Basin. Additionally, the company gained Blue Mountain Midstream, which operates in the heart of the Merge play in central Oklahoma, as a wholly owned subsidiary.

In early November, Riviera said production for the third quarter averaged roughly 302 million cubic feet equivalent per day (MMcfe/d). Net production from the company’s Arkoma Basin position during the quarter was about 24 MMcfe/d.

Riviera’s position in the Arkoma Basin consists of about 37,000 net acres, 100% HBP, with a large inventory of remaining horizontal locations. The assets have proved developed reserves of about 111 billion cubic feet equivalent and a PV-10 value of roughly $61 million, according to the company release.

Riviera said third-quarter production was 4% above the mid-point of its original guidance range for the quarter mainly due to higher production from nonoperated drilling in the Northwest Stack and lower downtime across our mature asset base.

“Though we are proud of what we have achieved during the third quarter, we are even more excited about our prospects moving forward given the strength of our unique asset base,” David Rottino, Riviera’s president and CEO, said during the company’s earnings call on Nov. 8. “We believe Riviera is well-positioned with a combination of mature, low-decline assets generating significant free cash flow in addition to tremendous growth assets including positions in the Northwest Stack, Arkoma Basin, East Texas and North Louisiana and of course the 100% ownership interest in the fast-growing Blue Mountain Midstream business.”

Riviera said it expects to close the sale of its Arkoma Basin assets in first-quarter 2019. The transaction will have an effective date of Aug. 1.

On the earnings call, Rottino also reiterated his commitment to total shareholder returns through capital discipline and efficiently managing Riviera’s assets in order to return capital to shareholders.

As of early November, Riviera had returned over $140 million of capital to shareholders through share repurchases and tender offer since its spinoff from Linn.

“Because we believe the company is undervalued, we have been aggressively repurchasing shares,” Rottino said adding the company will also resume share repurchases later that month.

Emily Patsy can be reached at epatsy@hartenergy.com.