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

HOUSTON, Nov 6 (Reuters) – Exxon Mobil Corp (XOM.N) will take as much as a $2 billion loss on the extremely leveraged sale of a troubled California offshore oil and fuel discipline which were idled since a 2015 pipeline spill.

The sale comes after a failed bid this yr to restart manufacturing on the web site and as Exxon culls poor performing companies. Santa Barbara officers in March rejected an Exxon plan to restart operations and ship oil by way of dozens of tanker vans every day to inland refineries.

Sable Offshore, a clean test firm based by trade veteran James Flores, will borrow 97% of the $643 million buy worth from Exxon beneath a five-year mortgage. Clean test corporations elevate cash to accumulate working companies. If Flores fails to restart manufacturing on the Santa Ynez discipline by the beginning of 2026, Exxon may take again your entire operation, Sable disclosed in a submitting.

Exxon was not instantly obtainable to touch upon phrases of the deal. It has accelerated asset gross sales to chop working prices and enhance returns after a historic loss in 2020.

Flores will search permits to restart Santa Ynez and expects to pump about 28,100 barrels of oil and fuel per day starting in 2024, in accordance with a Sable investor presentation. The sector has 112 wells and the potential for a minimum of one other 100 wells, its presentation confirmed.

A subsea pipeline leak seven years in the past despatched 2,400 barrels of the Santa Ynez oil into the Pacific Ocean, resulting in a shutdown. Exxon acquired the pipeline from its proprietor and has been making an attempt to renew manufacturing.

The Santa Ynez sale contains three oil and fuel platforms that sit as much as 9 miles (14 km) off the California coast, a pipeline and oil and fuel processing services. The primary platform was constructed within the Nineteen Seventies started producing oil in 1981.

Flores has a protracted historical past of shopping for and promoting corporations. He has run 5 U.S. oil corporations starting with Flores & Rucks Inc in 1992, and infrequently bought his corporations at sizeable features. His final enterprise, Sable Permian Assets, filed for Chapter 11 chapter in 2020 as oil costs tumbled.

Final yr, he raised $287.5 million by an preliminary public providing for the corporate that turned Sable Offshore. Sable should full a deal by March 1 or return the cash to its IPO buyers, its filings present.

Reporting by Gary McWilliams; Modifying by Lisa Shumaker

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