Exclusive Kimmeridge Builds Stake in California Resources, Talks for Change – Oil & Gas 360


Kimmeridge Energy Management Co LLC confirmed it has a stake in California Resources (NYSE: ) Corp and is working with the oil and gas producer on changes that could include selling some assets to real estate developers.

Source: Reuters

Sources familiar with the matter previously told Reuters that the energy-focused activist investment firm owns more than 3 million shares in California Resources, equivalent to a 4% stake, and has been in talks with the company’s management about steps to raise it in recent weeks. His estimation.

Mark Viviano, head of public equity at Kimmeridge, said in a statement: “He has had constructive and collaborative discussions with the management team.” The investor did not disclose how much of California Resources he owns.

Viviano’s statement said the talks included discussions on “how to best enhance the landscape of Huntington Beach.”

Kimmeridge has applied to California Resources, whose acreage in Orange County could fetch about $800 million if sold for conversion to residential real estate, sources said.

Kimmeridge said he should focus more on California Resources’ fledgling carbon capture and sequestration (CCS) business, the sources said.

In addition to helping California Resources reach its own net zero goals, the investor thinks the company will be well-positioned to capitalize on technology growth in the state, thanks to the company’s vast land footprint and deep knowledge of California geology. The sources added.

Old wells

“California’s mature conventional fields have the potential to generate low-margin free cash flow comparable to high-growth carbon sequestration,” Viviano said in a statement.

The sources spoke on condition of anonymity to discuss classified information. California Resources did not respond to a request for comment.

Shares of California Resources have fallen against their peers this year, despite their higher valuations, as investors put their money into other producers with higher growth rates that can capture commodity prices.

Most of California’s oil and gas resources come from old wells with low but constant production.

Compared to the 41.4% jump in the S & P energy index, it increased by 7.7%, giving it a capitalization of 3.5 billion dollars this year.

Earlier this month, the Long Beach-based company announced plans to partner with Brookfield Renewable to develop CCS projects throughout California. Brookfield is setting aside $500 million in awards, which could raise another $1 billion in capital.

Kimmeridge thanks the company for the move, Viviano said in a statement.

California Resources was formed in 2014 after Occidental Petroleum Corporation (NYSE: ) divested its California business to another entity. It emerged three months later, filing for Chapter 11 bankruptcy in July 2020 as oil prices plummeted as the pandemic began and weighed down by a $5 billion debt pile.

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