California Resources Corp. (NYSE: CRC) is looking to accelerate the development of its "vast resource basin" in the Golden State with a partnership with Macquarie Infrastructure and Real Assets worth up to $300 million.
The Los Angeles-based company said April 19 it formed a strategic joint venture (JV) in which Macquarie committed to fund the development of California Resources' properties, with a focus on the San Joaquin Basin.
The commitment follows an agreement in February between California Resources and Benefit Street Partners LLC to invest up to $250 million for development and deleveraging purposes.
Macquarie's initial commitment of $160 million will be deployed in California Resources' Kern Front, Mt. Poso, Pleito Ranch and Wheeler Ridge fields in the San Joaquin Basin. The investment will be made over two years in accordance with an already mutually approved development plan. Macquarie may increase its total investment to up to $300 million, according to the company release.
As part of the JV agreement, Macquarie will fund 100% of the development wells, earning a 90% working interest. California Resources' working interest will revert to 75% from 10% upon Macquarie achieving an agreed return.
Paul Beck, senior managing director for Macquarie Infrastructure and Real Assets (MIRA), said the firm was attracted to California Resources' "operational expertise, technical understanding and substantial infrastructure in the San Joaquin Basin."
California Resources' portfolio includes 2.3 million net acres with 30,900 identified gross locations, according to the company's fourth-quarter presentation. The assets consist of acreage in the San Joaquin, Los Angeles, Ventura and Sacramento basins.
"We are pleased to partner with MIRA to bring forward the value of our large and long-lived inventory and help to derisk and accelerate the development of CRC’s vast resource base," Todd Stevens, California Resources' president and CEO, said in a statement. "The joint venture also provides additional flexibility to aid in our deleveraging efforts through growing our production and cash flow."
Look for further coverage on California Resources by Leslie Haines, executive editor at large, in the May issue of Oil and Gas Investor magazine.
Recommended Reading
Hotter Temps Drive Japanese Demand for Spot LNG from US
2024-09-11 - Above-average temperatures are forecast for most regions of Japan through early October, compelling the country to seek prompt LNG, potentially from the U.S., to cover extended summer-related electricity demand.
Pitts: Is the Permian-Mexico-Asia Gas Route at Risk?
2024-09-11 - Delayed construction of Mexican LNG projects hinders U.S. producers’ ability to improve access to thriving markets.
Trillion Energy’s Offshore Turkey Well Begins Gas Production
2024-09-11 - Trillion Energy’s Akcakoca-3’s wellhead pressure increased to 616 psi, allowing the well to be put into production.
Hurricane Francine Bears Down on Central Louisiana LNG Facilities
2024-09-11 - Sempra’s Cameron LNG, Venture Global LNG’s facilities in Calcasieu Pass and Tellurian’s site for Driftwood LNG will all be close or in the path of Francine.
Trafigura, Gunvor Demand Sparks Jump in Brent Oil Benchmark
2024-06-28 - Trafigura has bought seven cargoes since June 21 and Gunvor bought Forties and WTI cargoes on June 24.