ACQUISITIONS AND DIVESTITURES

12 Months Ended

Dec. 31, 2019

NOTE 4 ACQUISITIONS AND DIVESTITURES

Acquisitions

Elk Hills Transaction

In April 2018, we acquired the remaining working, surface and mineral interests in the approximately 47,000-acre Elk Hills unit from Chevron U.S.A., Inc. (Chevron) (the Elk Hills transaction) for approximately $518 million, including $7 million of liabilities assumed relating to ARO. We accounted for the Elk Hills transaction as a business combination. As of December 31, 2019, we held all of the working, surface and mineral interests in the former Elk Hills unit. The effective date of the transaction was April 1, 2018.

As part of the Elk Hills transaction, Chevron reduced its royalty interest in one of our oil and natural gas properties by half and extended the time frame to invest the remainder of our capital commitment on that property by the end of 2020. As of December 31, 2019, the remaining commitment was approximately $12 million. In addition, the parties mutually agreed to release each other from pending claims with respect to the former Elk Hills unit.

The following table summarizes the total consideration, including customary closing adjustments, and the allocation of the consideration based on the fair value of the assets acquired as of the acquisition date:



Consideration:	(in millions)
Cash	$	460
Common stock issued (2.85 million shares)	51
Liabilities assumed	7
	$	518

Identifiable assets acquired:
Proved properties	$	435
Other property and equipment	77
Materials and supplies	6
	$	518

The results of operations for the Elk Hills transaction were included in our consolidated financial statements subsequent to the closing date.

Bakersfield Office Building

In April 2018, we also acquired an office building and land in Bakersfield, California for $48 million. For the initial eight months in 2018, a former owner of the building occupied most of the space as a tenant, from which we generated approximately $4 million in rental income. In December 2018, this tenant downsized the space they are leasing through December 2022, with a corresponding reduction in rent. The vacated space not used by us will be available to lease to other tenants to generate additional income. In addition, the unimproved land may be monetized in the future. Approximately $6 million of the purchase price was allocated to the in-place leases in 2018, which is included in other assets and is being amortized into other expenses, net.

Other

In 2019, we had several other acquisitions totaling approximately $6 million. In 2018, we had other upstream acquisitions totaling approximately $39 million, excluding assumed ARO liabilities of $1 million.

Divestitures

Lost Hills Divestiture

In May 2019, we sold 50% of our working interest and transferred operatorship in certain zones within our Lost Hills field, located in the San Joaquin basin, for total consideration in excess of $200 million, consisting of approximately $168 million and a carried 200-well development program to be drilled through 2023 with an estimated value of $35 million (Lost Hills divestiture). We received cash proceeds of $164 million after transaction costs and purchase price adjustments, which were used to pay down our 2014 Revolving Credit Facility. The partial sale of proved property was accounted for as a normal retirement with no gain or loss recognized. The partial sale of unproved property was recorded as a recovery of cost.

Other

In 2018, we divested non-core assets resulting in $18 million of proceeds and a $5 million gain.