California Resources Corp. (CRC) on Monday purchased the remaining interest in the historic Elk Hills oilfield in the San Joaquin Basin from Chevron Corp. for $460 million and 2.85 million common shares, giving it full ownership.
The deal, effective April 1, provides CRC all of the working, surface, and mineral interests in the 47,000-acre field in California. The latest purchase includes Chevron’s nonoperated working interests of 20-22% in different producing horizons. In 2017 the acquired interests produced about 13,300 boe/d, weighted 46% to oil, 9% to natural gas liquids and the rest to natural gas.
CEO Todd Stevens called the acquisition a "natural fit.” CRC has a "deep knowledge" of Elk Hills from its more than 20 years as the dominant operator. CRC gained the field when the company was spun off from Occidental Petroleum Corp.
"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,” Stevens said.
Elk Hills, California’s largest oil and NGL producer, is considered CRC’s flagship asset. Today the field has more than 3,000 producing wells. In 2017 CRC's Elk Hills assets produced 53,000 boe/d, with overall production from the field of 66,000 boe/d.
Elk Hills has four natural gas processing plants with 610 MMcf/d of capacity, three carbon dioxide removal plants and 4,500 miles of gathering pipelines. The field also has 45 MW of cogeneration and 550 MW of gas-fired generation plants.
"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," said a spokesperson, who added that 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 about $5 million of annualized operational savings within six months of closing and about $15 million of additional synergies within the next 18 months “as it streamlines processes and leverages its substantial infrastructure already in place,” it said.