MINERAL RIGHTS SALES

Adams & Wheeler Canyons - Santa Paula, CA - This 2,200 acre property was the site of late 1800's oil production via approximately 50 tunnels which were excavated into the side of Sulfur Mountain in locations proximate to natural oil seeps.  The tunnels produced oil for Union Oil until the mid 1990's.  Due to the low price of crude oil and complications associated with permitting continued operations, the tunnels were plugged and abandoned.  Natural oil seeps continued to flow into nearby streams resulting in on-going regulatory scrutiny.  To terminate any potential future liability associated with the abandoned tunnels and seeps, and cut off continuing property management costs, we sought to sell the property with a full release and indemnity from a substantial buyer.  We were able to identify a Fortune 400 E&P company in the area who was interested in expanding their reserve base.  The Buyer was wiling to acquire the property for an all cash price and issue an environmental indemnity, including responsibility for 175 - 200 plugged and abandoned oil wells and all of the former tunnels, provided Union Oil agreed to sell its remaining 27,610 acre mineral interest in the area.  Since Union was no longer producing in the area (stranded asset) we were able to close a deal that offered strong liability protections for the client and also realize a significant cash sale price.

Huntington Beach, CA Mineral Fee - Chevron owned 970 acres of mineral rights in Huntington Beach, CA.  This mineral fee was stranded since Chevron E&P had exited the LA Basin in the late 1990's and the surface had been completely developed for commercial, residential, and industrial uses.  To recognize value for this asset we sought a buyer with potential to access the minerals from off-site.  We identified two E&P companies in the area with interest in these minerals.  Both offered to purchase the assets on a cash basis.  However, we were also developing 1,450 acres in the Central Coast of California for residential uses and selling a 137 acre parcel in Bakersfield, CA.  One of the interested mineral Buyers owned the mineral fee beneath the both the Central Coast and Bakersfield properties.  Neither of these transactions could have been completed without Chevron ownership of the mineral interests.  We negotiated an exchange of minerals plus a cash payment to Chevron for 900 acres of the Huntington Beach mineral fee.  Since Chevron desired access to additional production acreage in Kern County, CA from the second E&P company, we negotiated a straight exchange of mineral interests for the remaining 70 acres of the Huntington Beach mineral fee.  This complicated transaction 1) netted the company significant cash income, 2) unencumbered land in the Central Coast for development and land in Bakersfield for sale, and 3) gave Chevron access to additional valuable production acreage in Kern County.

Oil Shale Property - Parachute Creek, CO - This property was the location of Union Oil's 10,000 BPD Shale Oil extraction plant which was closed in the early 1990's.  In-place shale oil reserves were over 1 billion barrels.  At the end of its oil shale operations, the company owned over 46,000 acres of land and mineral rights, an abandoned underground oil shale mine, and retorted shale tailings containing arsenic.  The tailings pile was reclaimed and planted with native vegetation.  Union Oil desired to sell the property while protecting itself against future environmental liability.  Due to the size of the property and lack of credible purchase offers, we elected to divide the asset into several strategic parcels and sell via an open auction.  Parceling the property for sale in this manner, elicited the interest of significant natural gas producers, some of whom already had mineral leases on portions of the property.  As a result, a single major natural gas producer ultimately agreed to acquire the entire property while providing corporate indemnities cover future liability associated with the spent shale tailings and abandoned underground mine.  The property was never placed at auction.  Also sold in the transaction were approximately 23 cfs of absolute and 118 cfs of conditional water rights in the Parachute Creek drainage and Colorado River.  To protect the company's interest in future oil shale extraction efforts we reserved a royalty interest in any future oil production.