California Resources (CRC) has secured 100% ownership in Elk Hills natural gas and natural gas liquids field in California by buying Chevron’s interests in exchange of $460m and 2.85 million of its shares.
Through the deal, CRC has acquired Chevron’s non-operated working interests in the range 20-22% across various producing horizons located in the Elk Hills field. Last year, the acquired interests had produced nearly 13,300 barrels of equivalent (BOE) per day, made up of 46% oil and 9% natural gas liquids.
Located in the Joaquin Basin, the onshore field holds an estimated 8.5 billion BOE of original oil and has 32 major producing zones which have been identified.
CRC president and CEO Todd Stevens said: “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.”
The Elk Hills field, which is located 20 miles southwest of Bakersfield in Kern County, is spread over approximately 75 square miles. Discovered in 1911, the natural gas and natural gas liquids field has produced more than 2 billion BOE.
Last year, the Elk Hills field had produced 48,000BOE per day from 3,000 wells, revealed CRC.
In February, CRC had announced a midstream joint venture with a portfolio company of the Private Equity Group of Ares Management.
The joint venture owns the 550MW Elk Hills natural gas-fired power plant, and a cryogenic gas processing plant with capacity of a 200 million cubic foot per day. Both the assets are located outside of Bakersfield in California.
CRC also secured an equity investment of $50m from the Ares-led investor group which had invested $750m in the joint venture.