California Resources (CRC) announced today it would buy Aera Energy in a deal valuing the company at $2.1 billion. This deal would enable the combined companies to double their production.
And the combined company will have interests across five of the biggest oil fields in California. The 2024 production averages about 150,000 barrels of oil equivalent per day. The deal would also add about 54 million metric tons of CCS pore space in the San Joaquin basin.
CRC would issue 21.2 million in common shares to equity owners of Aera (equal to approximately 22.9% of CRC’s fully diluted shares).
The deal is expected to close in the second half of 2024. CRC’s management team will run the combined company, which will be based in Long Beach, California, and at closing, IKAV and CPP Investments will each nominate one representative to the CRC Board.
KEY QUOTES:
“This strategic transaction will create scale in our operations, generate significant free cash flow, accelerate cash returns to shareholders and expand our energy transition platform. We remain committed to reducing emissions and this combination will advance our goal to permanently sequester 5 million metric tons per year of CO2 in our underground storage vaults.We are highly confident in our ability to drive sustainable savings that will enhance shareholder returns and deliver meaningful long-term value for our stakeholders. On behalf of CRC, we look forward to working with our new colleagues at Aera. Together, this combination will create an unquestioned leader in energy transition, producing low carbon intensity fuels that California needs while accelerating the decarbonization of the State’s industrial and energy industries.”
- Francisco Leon, CRC’s President and Chief Executive Officer
“Aera and CRC are two great companies with decades of experience and track records that will serve as a foundation for a strong combination. We are committed to continuing to deliver the energy Californians need today and working to deploy carbon capture at-scale.”
- Erik Bartsch, Aera’s President and Chief Executive Officer
“This transaction provides CPP Investments with an excellent opportunity to scale up our investment in California’s energy transition, with Aera and CRC both aligned in their commitment to enabling new carbon management solutions and each bringing complementary strengths to the table. The combined company is set to play a leading role in California’s energy transition, which we view as a promising source of long-term risk-adjusted returns for the CPP Fund.”
- Bill Rogers, Managing Director, Global Head of Sustainable Energies, CPP Investments
”The combination of CRC and Aera has strong industrial logic and aligns with our philosophy to make investments that effect positive change in the world. The merger brings together the strengths of both companies, who will be better together to operate what will be the largest oil and gas company in California by production. We believe that the world needs access to affordable, reliable and lower carbon energy sources and we advocate a co-existence between renewable and conventional energy for decades to come. We look forward to partnering with the CRC team to shape the future path of the energy transition.”
- Constantin von Wasserschleben, Chairman of IKAV
