California Resources acquires Elk Hills field from Chevron

California Resources (CRC) has acquired the remaining interests of the Elk Hills field in the San Joaquin Basin of California from Chevron.

Under the deal, CRC made a cash payment of $460m and issued 2.85 million common shares to Chevron.

The transaction allows CRC full ownership of the 47,000-acre field, including 100% working interest (WI) and 100% net revenue interest.

CRC president and CEO Todd Stevens said: “We have operated this field for more than 20 years and have developed a deep knowledge of 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.

“Acquiring sole ownership of such a prolific field is an ideal use of proceeds from our recent midstream joint venture (JV) transaction, adding both immediate production and cashflow, while providing for quick synergies and tremendous long-term development opportunities.”

As part of the deal, the company acquired Chevron’s non-operated WI within the Elk Hills fiend, which ranged between 20% and 22%.

Last year, production from the acquired interests was around 13,300 barrels of equivalent (BOE) per day. With 32 identified major producing zones, the field holds an estimated 8.5 billion BOE of original oil in place.

The acquisition is expected to enable CRC to achieve annualised operational savings of around $5m within six months of closing and additional synergies of $15m within the next 18 months.