The leaders of California Resources Corp., Long Beach, have sold the company\u2019s Uinta basin assets for about $90 million to an undisclosed buyer. The deal has an effective date of July 1 and is expected to close by yearend.<\/p>\n
\u201cToday\u2019s transaction strengthens our business,\u201d said Francisco Leon, CRC president and chief executive officer. \u201cThis transaction enhances our capital allocation flexibility, allowing us to invest in higher-return opportunities within the Golden State, and supports our shareholder return strategy.\u201d<\/p>\n
CRC had come to own the Uinta assets, which span about 100,000 net acres, after it acquired Berry Corp.<\/a> in December of last year for $709 million. But the operation accounts for a small part of CRC\u2019s business\u20132.5% of oil production and 8% of natural gas production in the second quarter\u2013and Leon last month told analysts \u201cit\u2019s hard to see allocating a lot of dollars back into the Uinta\u201d as his team focuses on building out its California network of assets.<\/p>\n \u201cIt requires a pretty significant amount of capital to develop the scale that we need for a second asset,\u201d Leon said Aug. 10 after CRC reported its second-quarter results. \u201cSo as we do a side-by-side and we compare the Uinta assets with California, Uinta has higher capital intensity, higher break-evens, lower crude quality [and] higher transportation and operating costs and steeper declines.\u201d<\/p>\n In the deal announcement, Leon said the Uinta sale also offsets the price CRC will pay for a set of midstream assets in California it plans to buy from CorEnergy Infrastructure Trust<\/a>. The purchase of those pipelines and other operations is expected to close later this month.<\/p>\n