Exxon loses 2 billion dollars from the sale of troubled oil assets in California

Exxon Mobil Corp will cover the losses of up to $2 billion. This money was received from the sale of a problematic offshore oil and gas field in California. It hasn’t been used since the oil spill in 2015. The sale of the pipeline required a large amount of borrowed funds.

The facility had to be sold after it failed to start production. In March, local authorities in Santa Barbara disapproved of the Exxon plan to reopen. As per Reuters, the company planned to lade many tank tracks with oil every year and deliver them to the inner oil refineries.   

97% of the original cost will be borrowed by Sable Offshore. This special purpose acquisition company was founded by James Flores who was working in this field for many years. The sum borrowed from Exxon will amount to $643 million. Everything will take place within the framework of a five-year loan. SPAC companies are firms that raise funds to acquire an existing business. According to Sable, if oil production at Santa Ynez won’t be resumed by early 2026, Exxon cancels everything.

During Sable's investor presentation, it was said that Flores would seek permission to restart the field. The company expects a production rate of around 28,100 barrels per day starting in 2024. According to the presentation, there are 112 wells in the field and the opportunity for at least 100 wells more.