Freeport-McMoRan Sells California Onshore Business

Freeport-McMoRan Inc. has agreed to sell its onshore California oil and gas properties to Sentinel Peak Resources California LLC for $592 million in cash.

The deal comes as Freeport-McMoRan has tried to refocus on producing copper, while Denver-based Sentinel Peak plans to open offices in Los Angeles and Bakersfield as it seeks to grow in the state. Sentinel Peak, formed this year and backed by private-equity firm Quantum Energy Partners, focuses on acquisitions and development primarily in California.

Freeport-McMoRan could receive additional funds of up to $150 million from 2018 to 2020--$50 million a year—if the price of Brent crude, the global benchmark, averages $70 a barrel or higher during that time. On Thursday, Brent rose to 22 cents $52.03 a barrel on the ICE Futures Europe.

The transaction, subject to closing conditions, is expected to close in fourth-quarter 2016 and Freeport-McMoRan doesn't expect to record a material gain or loss on the transaction. Freeport-McMoRan will still have offshore oil production assets in California, among other oil and gas operations elsewhere in the U.S.

Shares rose 1% to $9.74 in premarket trading after falling 26% in the past three months through Thursday's close.

Write to Joshua Jamerson at [e-mail]

(END) Dow Jones Newswires

October 14, 2016 09:25 ET (13:25 GMT)

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