Exxon faces $2 billion loss on California oil property sale
Exxon Mobil Corp will likely sell its gas and oil field off California that was shut down in 2015 when over 120,000 gallons of crude oil spewed into the Pacific Ocean.
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Exxon Mobil Corp, according to reports, is expected to lose about $2 billion when it sells an oil field off the coast of California, where an oil spill halted operations in 2015.
The petroleum giant is slated to sell the offshore oil and gas field to Sable Offshore, which was founded and operated by James Flores, for $643 million.
FILE - Clean-up workers monitor the source of an oil pipeline break near Refugio State Beach, north of Goleta, Calif. The owner of an oil pipeline that spewed thousands of barrels of crude oil onto Southern California beaches in 2015 has agreed to pa ( (AP Photo/Michael A. Mariant, File) / AP Newsroom)
Reuters reported that Flores will borrow 97% of the money for the purchase from Exxon under a five-year loan.
Sable Offshore is a blank check company, or one that raises money for acquiring businesses.
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The deal between Flores and Exxon is that he must restart operations at the Santa Ynez field by 2026 or face Exxon taking back the operations, Reuters reported.
Exxon is selling the oil and gas field after failing to restart operations due to a pipeline spill in 2015 that leaked over 120,000 gallons of oil into the Pacific Ocean.
In its plans to restart operations, Exxon proposed using dozens of trucks to ship oil to refineries, but Santa Barbara officials rejected the plan back in March.
FILE - Workers in protective suits continue to clean the contaminated beach in Huntington Beach, Calif., on Oct. 11, 2021. A pipeline operator has agreed to pay $50 million to Southern California fishermen, tourism companies and property owners who s (AP Newsroom)
As Flores and his team take over operations, they will seek to obtain the necessary permits to pump 28,100 barrels of oil and gas per day from 112 current wells, and potentially 100 more, by 2024, Sable noted in a presentation.
As part of the sale, Sable will obtain three oil and gas platforms in the Santa Ynez oil field, roughly nine miles offshore, along with processing facilities for oil and gas, and a pipeline.
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The field was first tapped in the 1970s and started producing oil in 1981, according to Reuters.
The spill in 2015 forced the State of California to shut down popular beaches because of the oil sheen that spread for miles.
FILE - An oil-covered bird flaps its wings amid at Refugio State Beach, north of Goleta, Calif. The owner of an oil pipeline that spewed thousands of barrels of crude oil onto Southern California beaches in 2015 has agreed to pay $230 million to sett ((AP Photo/Jae C. Hong, File) / AP Newsroom)
The spill was blamed for the deaths of over 300 dead animals, including sea lions and pelicans, and sent tar balls drifting over 10 miles away to the beaches in Los Angeles.
Ultimately, Plains All American Pipeline was fined $3.35 million for causing the worst coastal spill in California in 25 years. Prosecutors sought $1 billion in penalties.
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Plains All American Pipeline has apologized for the spill and paid for the cleanup. The company’s 2017 annual report estimated costs from the spill to be $335 million, not including lost revenues.
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