ConocoPhillips has completed the sale of its San Juan Basin assets in the US state of New Mexico for $3bn to Hilcorp San Juan, an affiliate of Hilcorp Energy.

The acquisition by Hilcorp Energy, comprising of 1.3 million net acres is expected to position it among the leading producers in the San Juan Basin.

Hilcorp Energy says that the assets it has bought are filled with opportunity to develop production profitably.

The production capacity of the San Juan Basin assets bought by Hilcorp is approximately 120,000BOED with an annual decline rate of 7%.

Hilcorp Energy president and chief operations officer Greg Lalicker said: “Hilcorp sees decades of future production and development in the basin.

“We are excited for the opportunity to enhance oil and natural gas production in the Four Corners Region, and we expect to become responsible members of the local community by boosting economic activity and developing strong, long-lasting partnerships.

Hilcorp says that its next step will be to take over operations of the assets in a safe and environmentally responsible manner from ConocoPhillips.

Simultaneously, it plans to launch its work to stabilize the production from the San Juan Basin assets. Hilcorp further added that workover rigs will be moved to the San Juan Basin in the near-term to commence working on existing wells.

It was in April, that ConocoPhillips and Hilcorp had agreed on the transaction which involved $2.7bn in cash and contingent payments in the tune of up to $300m. Eventually, the cash proceeds made by ConocoPhillips post customary closing adjustments came to $2.5bn.

ConocoPhillips chairman and CEO Ryan Lance said: “Completion of the sale of our San Juan Basin assets is a key milestone in the continuing high-grading of our portfolio.

“We believe the proceeds from this transaction along with our other dispositions are strengthening our balance sheet and allowing us to deliver on our value proposition.”

Prior to the San Juan Basin transaction, ConocoPhillips in late March had agreed to divest major stakes in its Canadian oil and gas assets to Cenovus Energy for $13.3bn.

Image: San Juan Basin in New Mexico. Photo: courtesy of ConocoPhillips Company.