Freeport-McMoRan (FCX) has signed an agreement to sell its onshore oil and gas properties in California, US, to Sentinel Peak Resources California for $742 million.
At present, the properties are producing 28,000 barrels of oil per day (bopd), including 18,000bopd in the San Joaquin Basin and 10,000bopd in the LA Basin and Coastal properties, and also reported a book value of approximately $0.1 billion on 30 June this year.
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Sentinel will also assume future abandonment obligations associated with these properties.
At the time of closing FCX will receive $592 million under the agreement.
The company will receive an additional consideration of $50 million per year during 2018, 2019 and 2020 in case the price of Brent crude oil averages $70 per barrel or higher during that calendar year.
Net daily sales volumes from these properties for the twelve-month period ended 30 June and averaged at 28.6 thousand barrels of oil per day.
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By GlobalDataRevenues during this period totalled $0.4 billion, while cash production costs totalled $0.3 billion and capital expenditures totalled $0.04 billion.
FCX plans to use net proceeds from the sales to repay debts.
Following completion of this sale and the previously announced Deepwater Gulf of Mexico (GOM) sale, the company’s portfolio would include oil and natural gas production onshore in South Louisiana and on the Shelf of the GOM, oil production offshore California, as well as natural gas production from the Madden area in Central Wyoming.
During the second quarter of this year, these properties produced an average of 8.6 thousand barrels of oil and natural gas liquids per day in addition to 78 million cubed feet of natural gas per day.
Subject to customary closing conditions, the transaction is expected to close in the fourth quarter of this year.
