People familiar with the matter said that Reuters- Kimmeridge Energy Management Company LLC has a stake in California Resources Corp and is pushing the oil and gas producer to change its acreage in order to sell some acreage to real estate developers.
The activist investment firm has more than 3 million shares in California Resources, equivalent to about 4% of the company's management, and has been in talks with the company's management in recent weeks about how to boost its valuation, the sources said.
According to the sources, the idea of the divesting California Resources' Huntington Beach acreage in Orange County could fetch around $800 million if sold for conversion to residential real estate.
Sources said they were talking about confidential information on condition of anonymity. California Resources was not immediately available for comment. A spokesman for Kimmeridge wouldn't say anything.
California Resources' shares have languished compared to peers this year, despite high U.S. crude and natural gas prices, as investors put money into other producers with higher growth rates that can capture this commodity price upswing.
Much of California Resources' oil and gas comes from older wells that have low-but- steady production.
The stock has risen 7.7% this year, giving it a market value of $3.5 billion, compared to the 41.4% jump in the S&P energy index.
A joint venture with Brookfield Renewable is planned for CCS projects across California earlier this month, according to Long Beach-based company. Brookfield is putting up $500 million for the venture, with the potential for another $1 billion of capital. The sources said Kimmeridge is supportive of the move.
California Resources was formed in 2014 after Occidental Petroleum Corp spun off its California business. It filed for Chapter 11 bankruptcy in July 2020, which emerged from it three months later, because of the slump in oil prices and $5 billion debt pile.