Full-year 2016 production for San Juan Basin assets was 124,000 BOE per day
ConocoPhillips announced it entered into an agreement to sell its interests in the San Juan Basin to an affiliate of Hilcorp Energy Company for up to $3.0 billion of total proceeds, comprised of $2.7 billion in cash and a contingent payment of up to $300 million, according to a press release.
The cash portion of the proceeds is subject to customary closing adjustments. The contingent payment is effective beginning Jan. 1, 2018 and has a term of six years. Proceeds from this transaction will be used for general corporate purposes.
“This transaction significantly accelerates value from our San Juan Basin assets,” said Ryan Lance, chairman and CEO. “Including our recently announced Canadian asset sales, we have line of sight to more than $16 billion of total considerations in 2017. These transactions will materially reduce our exposure to North American gas and achieve an immediate step change improvement in our balance sheet and cash margins, while accelerating our return of cash to shareholders.
Lance says he expects ConocoPhillips to be more focused, far stronger financially, and well positioned to execute a “disciplined, returns-focused value proposition.”
Full-year 2016 production associated with the San Juan Basin assets was 124,000 BOE per day, of which approximately 80 per cent was natural gas.
Cash provided by operating activities for 2016 was approximately $0.2 billion. Year-end 2016 proved reserves were 0.6 billion barrels of oil equivalent.
As of Dec. 31, 2016, the net book value of the assets was approximately $5.9 billion, which includes approximately $2.8 billion of step-up basis associated with the Burlington acquisition in 2006.
The company expects to record a non-cash impairment on the assets in the second quarter of 2017.
The transaction is subject to specific conditions precedent being satisfied, including regulatory approval, and is expected to close in the third quarter of 2017.