California Resources Corporation Acquisition Consolidates Interests in Elk Hills Field
April 09 2018 - 5:00PM
Business Wire
California Resources Corporation (NYSE: CRC) today announced
that it has executed and closed a purchase and sale agreement with
Chevron to acquire the remaining working, surface and mineral
interests in the 47,000-acre Elk Hills field in the San Joaquin
Basin of California. Consolidating sole ownership of the Elk Hills
field, CRC paid cash consideration of $460 million and issued 2.85
million CRC common shares to Chevron, subject to customary
post-closing adjustments. The effective date of the transaction was
April 1, 2018.
Todd Stevens, President and Chief Executive Officer, stated,
“This acquisition is a natural fit that immediately accretes value
to CRC, improving our cash flow and credit metrics. With a surface
area larger than Washington, D.C., the Elk Hills field is our
flagship asset. We have operated this field for over 20 years and
have developed a deep knowledge of the geology and strong
operational expertise to deliver robust value from this asset. We
intend to apply this know-how to our newly acquired position, as
well as transfer learnings and efficiencies to enhance CRC’s assets
across California. We would like to thank Chevron for their
partnership over the past 20 years. Acquiring sole ownership of
such a prolific field is an ideal use of proceeds from our recent
midstream joint venture transaction, adding both immediate
production and cash flow, while providing for quick synergies and
tremendous long-term development opportunities.”
The acquisition includes Chevron’s non-operated working
interests ranging between 20% to 22% in different producing
horizons within the Elk Hills field. In 2017, the acquired
interests produced approximately 13,300 barrels of equivalent (BOE)
per day with 46% oil and 9% natural gas liquids. CRC estimates that
if it had owned 100% of the field last year, these interests would
have added approximately 64 million BOE of proved reserves at
year-end 2017, of which approximately 75% are considered proved
developed. CRC estimates that these interests would have generated
approximately $100 million of annual operating cash flow in 2017
assuming current prices.
CRC now owns Elk Hills in fee simple, the most complete form of
ownership, holding a 100% working interest and a 100% net revenue
interest, as well as all surface lands in the Elk Hills field. The
field has an estimated 8.5 billion BOE of original oil in place and
32 major producing zones currently identified. CRC expects to
achieve approximately $5 million of annualized operational savings
within six months of closing and approximately $15 million of
additional synergies within the next 18 months as it streamlines
processes and leverages its substantial infrastructure already in
place. Elk Hills is CRC’s lowest cost operating area and with a
100% ownership interest would have accounted for approximately 43%
of its 2017 pro-forma production. Because of the low operating
costs at Elk Hills, this acquisition will immediately reduce CRC’s
corporate per unit production costs by approximately $0.55 per BOE,
in addition to lowering general and administrative costs by about
$0.20 per BOE. Additional information regarding the transaction
described above is available in CRC’s latest corporate presentation
on the “Earnings and Presentations” page in the Investor Relations
section on www.crc.com.
About Elk Hills Field
The Elk Hills Field is a world-class onshore asset located 20
miles southwest of Bakersfield in Kern County. The field, covering
nearly 75 square miles, was discovered in 1911 and has produced
over 2 billion barrels of oil equivalent (BOE), making it one of
the most productive fields in the United States. During 2017, we
produced 48,000 BOE per day (37 percent of CRC’s total production)
on average from our 3,000 wells at Elk Hills. At year-end 2017,
CRC’s approximate 78% interest in Elk Hills had proved reserves of
206 million BOE, of which 75% are considered proved developed. Elk
Hills is the largest natural gas and natural gas liquids field in
California, generating over half of the state’s natural gas
production.
About California Resources
Corporation
California Resources Corporation is the largest oil and natural
gas exploration and production company in California on a
gross-operated basis. The Company operates its world class resource
base exclusively within the State of California, applying
complementary and integrated infrastructure to gather, process and
market its production. Using advanced technology, California
Resources Corporation focuses on safely and responsibly supplying
affordable energy for California by Californians.
Forward-Looking
Statements
This release contains forward-looking statements that involve
risks and uncertainties that could materially affect our expected
results of operations, liquidity, cash flows and business
prospects. Such statements include those regarding our expectations
as to future: financial position, liquidity, cash flows and results
of operations; business prospects; transactions and projects;
operating costs; operations and operational results including
capital investment and expected VCI; and budgets.
Actual results may differ from anticipated results, sometimes
materially, and reported results should not be considered an
indication of future performance. While we believe the assumptions
or bases underlying our expectations are reasonable and make them
in good faith, they almost always vary from actual results,
sometimes materially. Factors (but not necessarily all the factors)
that could cause results to differ include the factors discussed in
“Risk Factors” in our Annual Report on Form 10-K available on our
website at www.crc.com.
Words such as "anticipate," "believe," "continue," "could,"
"estimate," "expect," "goal," "intend," "likely," "may," "might,"
"plan," "potential," "project," "seek," "should," "target, "will"
or "would" and similar words that reflect the prospective nature of
events or outcomes typically identify forward-looking statements.
Any forward-looking statement speaks only as of the date on which
such statement is made and the Company undertakes no obligation to
correct or update any forward-looking statement, whether as a
result of new information, future events or otherwise, except as
required by applicable law.
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version on businesswire.com: https://www.businesswire.com/news/home/20180409006415/en/
California Resources CorporationScott Espenshade (Investor
Relations)818 661-6010Scott.Espenshade@crc.comorMargita Thompson
(Media)818 661-6005Margita.Thompson@crc.com
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