Another industry combination will create California's largest oil producer.
Shell Oil Co.'s CalResources LLC unit and Mobil Exploration & Production U.S. Inc. signed definitive agreements to combine both companies' California E&P operations to form the state's largest oil producer.
The combined entities began operating June 1 as Aera Energy LLC. Shell holds a 58.6% interest, while Mobil holds the remaining 41.4%.
Aera has proven reserves of more than 1 billion bbl of oil equivalent (boe) and production of about 250,000 boed. CalResources produces about 150,000 boed; Mobil produces about 100,000 boed in California.
The companies announced their plans last November (OGJ, Nov. 11, 1996, Newsletter).
The new concern is headquartered in Bakersfield, where both companies have operated adjacently in Kern County's Belridge and Midway-Sunset fields. Proximity of their operations will reduce operating expenses and capital costs, eliminate duplication of efforts, and result in economies of scale. Among the benefits of consolidation, the company expects to gain $1/ bbl in pre-tax benefits over the next 2 years.
The company will employ about 1,100, about 800 in Kern County.
The combination will result in the elimination of about 275 positions overall, as well as overall estimated savings of about $100 million on a pre-tax basis in capital and personnel costs, officials said. Affected Shell and Mobil employees may be offered transfers to other areas or terminated with severance packages.
Eugene Voiland, CalResources president and CEO, will serve as president and CEO of Aera.
Greg Cox, leader of Mobil's heavy oil business unit, will be chief operating officer.
Shell and Mobil's California downstream operations are not part of the deal.
Copyright 1997 Oil & Gas Journal. All Rights Reserved.
