Shares of Freeport-McMoRan (FCX) were up pre-market Friday after the natural resource giant said it sealed a deal to sell its onshore oil and gas properties in California to Sentinel Peak Resources California for $742 million, which includes a contingent consideration.
Under the terms of the agreement, Freeport will receive a $592 million cash consideration at closing and $50 million in additional consideration per year for 2018, 2019, and 2020 if Brent crude prices average $70 per barrel or higher for each calendar year. Sentinel will also assume future abandonment obligations related to the properties, which had a book value of about $100 million as of June 30.
Freeport said it does not expect to book a gain or loss on the transaction, which is slated to close in Q4, subject to customary closing conditions. The company said it will use proceeds for debt repayment.