California Resources acquires Chevron's remaining interests in Elk Hills field

4/13/2018

LOS ANGELES -- California Resources Corporation has 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 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.

The acquisition includes Chevron’s non-operated working interests ranging between 20% to 22% in different producing horizons within Elk Hills field. In 2017, the acquired interests produced approximately 13,300 boed 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 MMboe 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 Elk Hills field. The field has an estimated 8.5 Bboe 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/boe, in addition to lowering general and administrative costs by about $0.20/boe.

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