Hilcorp Affiliate to Acquire San Juan Basin Assets from ConocoPhillips
- Author: Zachary Reyes Apr 14, 2017,
Apr 14, 2017, 4:48
ConocoPhillips, the largest USA independent oil producer, said on Thursday it would sell natural gas-heavy assets in San Juan basin to privately held Hilcorp Energy Co for about $3 billion. Its assets there produce some 124,000 barrels of oil equivalent a day, but almost 80 percent of that is natural gas.
"Our company will be more focused, far stronger financially, and well positioned to execute our disciplined, returns-focused value proposition". Its proved reserves were 0.6 billion barrels of oil equivalent at 2016 end.
Under the deal terms, ConocoPhillips will receive US$2.7bn in cash and a contingent payment of up to US$300mln, effective January 1, with a term of six years.
Hilcorp said it estimates 2017 production from the San Juan assets could reach about 115,000 boe/d, consisting of about 80% natural gas and 20% NGL.
Conoco's chief executive, Ryan Lance said: "This transaction significantly accelerates value from our San Juan Basin assets". It collected about $200 million in cash from operations there past year. The San Juan Basin is in southwestern states including New Mexico and Colorado. The company clarified that its cash component is subject to closing adjustments.
ConocoPhillips said it expected to write down the value of the assets in the second quarter, recording an impairment charge. The company expects the transaction to be completed in the September quarter.
During an analyst presentation last November, Lance laid out plans for the super independent to market up to $8 billion of assets, primarily gas-weighted properties in North America, to make way for investments elsewhere, including in the Permian Basin, and the Eagle Ford and Bakken shales.