In separate deals, Shell plc and ExxonMobil have agreed to sell interests in Aera Energy LLC, Bakersfield, Calif., to asset management group IKAV, headquartered in Germany.
Shell Offshore Inc. agreed to sell its 100% interest in Shell Onshore Ventures LLC, which holds a 51.8% membership interest in Aera Energy, for about $2 billion in cash with additional contingent payments based on future oil prices.
In a separate release Sept. 1, ExxonMobil said the company and certain affiliates agreed to sell all the company’s interests in the Aera oil-production operation to Green Gate Resources E LLC, an IKAV subsidiary.
For ExxonMobil, the deal involves a share sale of Mobil California Exploration & Producing Asset Co., which holds a 48.2% share of Aera Energy LLC and a 50% share of Aera Energy Services Co., a joint venture with Shell. It was formed in June 1997 and has operations in eight onshore fields. Aera is one of California’s largest oil and gas producers, accounting for nearly 25% of the state’s production. In 2021, Aera produced about 95,000 boe/d.
Aera operates around 13,000 wells in the San Joaquin Valley in California, producing oil and associated gas. While most of its oil production originates from Kern County, the company also has active oil field operations in Ventura, Monterey, and Fresno counties. The company will remain as operator.
IKAV’s investment “underlines that conventional energy will continue to play an essential role in California’s energy supply during the state’s transition to renewable sources,” and will help achieve statewide carbon neutrality goals, the asset management group said in its own release Sept. 1.
It plans to commit “significant investments to build a diversified renewable energy portfolio on site, including wind, solar (some supplemented with batteries), concentrated solar power (CSP), as well as carbon capture and storage.” Initially, the group said, the renewable assets will exclusively serve the energy demands of the oil production infrastructure, but over time, will be able to feed power directly into the California grid.
The deal adds to IKAV’s US-based energy assets. In 2019, the group acquired bp’s San Juan gas assets in Colorado and New Mexico, which comprise over 650,000 acres and produce about 600 MMcfed.
Going forward, the IKAV deal ends Shell's upstream position in California, but the company said it will “remain active in the state through a variety of other assets and projects.” The operator has secured and will maintain its current oil marketing agreement for a period of at least 5 years following sale completion, it said.
ExxonMobil said the sale does not affect its branded network of about 500 independently owned retail sites in the state.
Also in its release, ExxonMobil said affiliates have entered into a separate agreement for the sale of an associated loading facility and pipeline system, but additional details were not provided.
IKAV’s transactions with Shell and ExxonMobil are expected to close in this year’s fourth quarter, subject to regulatory approvals.