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Linn Energy Amends Berry Petroleum Merger as Accounting Woes Ease

Tickers in this article: BRY LINE LNCO

NEW YORK ( TheStreet) -- Linn Energy has amended the terms of its proposed acquisition of Berry Petroleum , as the upstream oil and gas master limited partnership (MLP) continues to press for a deal and resolve accounting concerns that have weighed on the company's share price in recent months.

Linn Energy, through its acquisition unit LinnCo , will offer 1.68 shares for each Berry Petroleum share, in a transaction that is now valued at $4.9 billion when including debt. The Houston-based driller previously offered Berry Petroleum investors 1.25 shares of LinnCo for each of their shares.

The revised merger proposal will increase the price of Linn's acquisition by roughly $600 million, according to Friday closing share prices.

Linn Energy shares were rising over 4% in pre-market trading. Shares in Linn Energy surged by over 11% on Friday after it said in a filing that the Securities and Exchange Commission had resolved its comments on the company's accounting disclosures.

"As of the date hereof, there are no outstanding or unresolved comments in any comment letters of the staff of the SEC received by the Company relating to the Company SEC Documents," Linn Energy said in its filing .

In July, the company disclosed it was subject to an informal SEC review into its accounting disclosure.

Friday's note that the SEC has no outstanding comments on the company's accounting disclosures may help Linn Energy close its long-awaited merger of Berry Petroleum.

As part of Linn Energy's increased share exchange for Berry Petroleum, both parties agreed to extend a deadline on the merger transaction through Jan. 31, 2014. Linn's initial bid, made in early 2013, had set an Oct. 31, 2013 deadline.

Linn Energy will file an amended merger proposal to the SEC to reflect its increased share exchange offer, the seventh amendment since a deal was first announced. The boards of both Linn Energy and Berry Petroleum have approved Monday's revised offer.

"The boards and management teams of LINN and Berry remain committed to completing this merger. We continue to believe that, upon completion, this transaction will create tremendous value for LINN Energy, LinnCo and Berry investors," Mark E. Ellis, Linn Energy's CEO and Robert F. Heinemann, Berry Petroleum's CEO said in a joint statement.

Linn Energy and Berry Petroleum have set a record date of Nov. 14, 2013 on the amended transaction and anticipate scheduling shareholder meetings to vote on the all-stock deal by mid-December.

Monday's amended deal indicates that uncertainty over Linn Energy's finances and its poorly performing share price caused an increased exchange ratio. Strong recent operating results at Berry Petroleum also may have given the company leverage to negotiate a higher bid.

In late October, Berry Petroleum reported third quarter adjusted earnings per share of 95 cents, ahead of consensus of 89 cents as a result of higher oil volumes and lower costs, according to Sterne Agee analyst Tim Rezvan.