Exxon faces $2 billion loss on sale of troubled California oil properties

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[1/2] The logo of Exxon Mobil Corporation is shown connected a show supra the level of the New York Stock Exchange successful New York, December 30, 2015. REUTERS/Lucas Jackson/File Photo

  • Exxon volition concern merchantability of offshore California lipid field
  • Blank-check steadfast to restart cognition idled by 2015 spill

HOUSTON, Nov 6 (Reuters) - Exxon Mobil Corp (XOM.N) volition instrumentality up to a $2 cardinal nonaccomplishment connected the highly leveraged merchantability of a troubled California offshore lipid and state tract that person been idled since a 2015 pipeline spill.

The merchantability comes aft a failed bid this twelvemonth to restart accumulation astatine the tract and arsenic Exxon culls mediocre performing businesses. Santa Barbara officials successful March rejected an Exxon program to restart operations and ship lipid via dozens of tanker trucks each time to inland refineries.

Sable Offshore, a blank cheque institution founded by manufacture seasoned James Flores, volition get 97% of the $643 cardinal acquisition terms from Exxon nether a five-year loan. Blank cheque companies rise wealth to get operating businesses. If Flores fails to restart accumulation astatine the Santa Ynez tract by the commencement of 2026, Exxon could instrumentality backmost the full operation, Sable disclosed successful a filing.

Exxon was not instantly disposable to remark connected presumption of the deal. It has accelerated plus income to chopped operating costs and amended returns aft a historical nonaccomplishment successful 2020.

Flores volition question permits to restart Santa Ynez and expects to pump astir 28,100 barrels of lipid and state per time opening successful 2024, according to a Sable capitalist presentation. The tract has 112 wells and the imaginable for astatine slightest different 100 wells, its presumption showed.

A subsea pipeline leak 7 years agone sent 2,400 barrels of the Santa Ynez lipid into the Pacific Ocean, starring to a shutdown. Exxon acquired the pipeline from its proprietor and has been trying to resume production.

The Santa Ynez merchantability includes 3 lipid and state platforms that beryllium up to 9 miles (14 km) disconnected the California coast, a pipeline and lipid and state processing facilities. The archetypal level was built successful the 1970s began producing lipid successful 1981.

Flores has a agelong past of buying and selling companies. He has tally 5 U.S. lipid companies opening with Flores & Rucks Inc successful 1992, and often sold his companies astatine sizeable gains. His past business, Sable Permian Resources, filed for Chapter 11 bankruptcy successful 2020 arsenic lipid prices tumbled.

Last year, helium raised $287.5 cardinal done an archetypal nationalist offering for the institution that became Sable Offshore. Sable indispensable implicit a woody by March 1 oregon instrumentality the wealth to its IPO investors, its filings show.

Reporting by Gary McWilliams; Editing by Lisa Shumaker

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