California Resources and Macquarie Infrastructure and Real Assets (MIRA) have agreed to a US$160 million joint venture to expand oil and gas activity in California.
Under the terms of the deal, MIRA has committed to provide US$160 million for the development of oil and gas properties in the state, California Resources said in a statement.
Development will focus on the San Joaquin Basin area of California and in the first instance will include opportunities in the Kern Front, Mt Poso, Pleito Ranch and Wheeler Ridge fields, the company added.
The initial commitment is set to be invested over a period of two years and MIRA, subject to the agreement of both parties, may increase its total investment up to US$300 million, California Resources said.
MIRA will fund 100% of the development wells, in which it will earn a 90% working interest, the firm added. Meanwhile, California Resources’ working interest will increase from 10% to 75% once MIRA achieves an agreed return, which was not disclosed.
“We are pleased to partner with MIRA to bring forward the value of our large and long-lived inventory and help to de-risk and accelerate the development of California Resources’ vast resource base,” said California Resources president and CEO, Todd Stevens.
“We are attracted to California Resources’ operational expertise, technical understanding and substantial infrastructure in the San Joaquin Basin,” said MIRA’s senior managing director, Paul Beck.
Los Angeles-based California Resources claims to be the largest exploration and production company in the state on a gross operated basis.
It has 2.4 million net acres (9,712 square km) of mineral acreage in California, spanning the state’s four major oil and gas basins, which it says also makes it the largest private holder of acreage.
As of the end of 2015, around 70% of the firm’s estimated proven (1P) reserves were located in the San Joaquin Basin, where it is in the process of developing a total of 45 fields.
California is the third largest oil producing state in the US, with five of the 12 largest fields in the Lower 48 states, according to California Resources.
MIRA is part of Macquarie Asset Management, the asset management arm of the Macquarie banking group.