This morning, Aggressive Portfolio recommendation Linn Energy (NSDQ: LINE) announced a deal to acquire oil-producing properties in the Permian and Anadarko basins for a total price of $154.5 million.

For months we’ve written that the normalization of credit markets would allow Linn Energy to make acquisitions once again and that these deals would ultimately boost the company’s quarterly distributions. 

In early October Linn Energy announced a public offering of 6 million new units, the proceeds from which would be used to pay down debt and increase the MLP’s firepower to make strategic acquisitions. Demand for Linn’s units was so strong that the company subsequently increased its offering to as much as 8.6 million units at a price of $21.90, raising nearly $190 million before underwriting fees

As we stated in a Flash Alert issued on October 7, the unit offering provided an excellent buying opportunity because Linn would likely plow this money into acquiring productive assets. Today, Linn did just that.

This is Linn’s second major acquisition in three months, putting the firm a little more than halfway to its goal of making $500 million in deals over the next 18 months. We suspect the MLP will ultimately exceed that goal, as management has stated that there’s no shortage of attractive oil-focused acquisition opportunities in its core markets.

The properties Linn acquired in this deal currently produce around 1,700 barrels of oil equivalent per day. Nearly 80 percent of that production is oil; the remainder comes from natural gas and natural gas liquids (NGLs).

Linn is paying roughly $91,000 per flowing barrel of daily oil production, just slightly above the $87,500 per flowing barrel it paid for its acquisitions back in August. At first blush, these numbers may strike you as being on the high side, but consider that 1,700 barrels per day equates to about 621,000 barrels per year. With oil prices at roughly $75 a barrel that adds up to $47 million in annual revenues. And given current futures market conditions, Linn can lock in oil prices for years into the future at prices well above $75 a barrel.

Linn noted that the decline rate on its new acquisitions is only around 6 percent per year, and there might be upside to production–the company has identified 100 new low-risk drilling locations.

The acquisition will close in January and should grow the MLP’s distributable cash flow immediately. Higher distributable cash flow growth from acquisitions ultimately spells higher payouts for unitholders. Linn Energy is a buy under 26.

The acquisition could hold positive implications for Aggressive Portfolio holding Legacy Reserves (NSDQ: LGCY). Legacy is active in the Permian Basin, and Linn’s deal suggests that acquirers are finding attractive opportunities in this core region. Buy Legacy Reserves under 18.