Exxon Mobil Corp. is expected, according to reports, 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 oil giant is set to sell the offshore oil and gas field to Sable Offshore, founded and operated by James Flores, for $643 million.
Reuters reported that Flores will borrow 97% of the funds to purchase from Exxon under a five-year loan.
Sable Offshore is a blank check company, or a company that raises money in order to get business.
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Reuters reported that the agreement between Flores and Exxon is that it must resume operations at the Santa Ynez field by 2026 or face Exxon to restore operations.
Exxon is selling the oil and gas field after failing to resume operations due to a 2015 pipeline leak that spilled more than 120,000 gallons of oil into the Pacific Ocean.
In its plans to resume operations, Exxon proposed using dozens of trucks to ship oil to refineries, but Santa Barbara officials rejected the plan again in March.
Sable noted in a presentation that with Flores and his team taking over operations, they will seek the necessary permits to pump 28,100 barrels of oil and gas per day from 112 existing wells, and possibly another 100 by 2024.
As part of the sale, Sable will acquire three oil and gas rigs in the Santa Ynez oil field, approximately nine miles offshore, along with oil and gas processing facilities and a pipeline.
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According to Reuters, the field was first exploited in the 1970s and oil production began in 1981.
The spill in 2015 forced California to close popular beaches due to an oil sheen that spread for miles.
The spill was blamed for the deaths of more than 300 animals, including sea lions and pelicans, and sent tarballs that drifted 10 miles to beaches in Los Angeles.
In the end, Plains All American Pipeline was fined $3.35 million for causing California’s worst coastal spill in 25 years. Prosecutors sought $1 billion in penalties.
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Plains All American Pipeline apologized for the leak and paid for the cleaning. The company’s 2017 annual report estimated the costs from the leak at $335 million, not including lost revenue.
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