Freeport-McMoran to sell onshore California oil & gas properties for $742m

US metals and mining group Freeport-McMoran has agreed to sell its onshore California oil and gas properties to Sentinel Peak Resources California for $742m.

Under the terms of the deal, FCX will receive a cash consideration of $592m at closing and additional consideration of $50m a year in each of 2018, 2019 and 2020 if the price of Brent crude oil averages $70 per barrel or higher in that calendar year.

The purchasers will also assume future abandonment obligations associated with the properties, which had a book value of around $0.1bn at the end of June.

Following completion of this transaction and the previously announced Deepwater Gulf of Mexico (GOM) sale, Freeport’s portfolio of oil and gas assets would include oil and natural gas production onshore in South Louisiana and on the Shelf of the GOM, oil production offshore California and natural gas production from the Madden area in Central Wyoming.

In the second quarter of 2016, these properties produced an average of 8.6 thousand barrels of oil and natural gas liquids per day and 78 million cubic feet of natural gas per day.

Freeport said net cash proceeds from the deal - expected to close in the fourth quarter - will be used to pay down debt. It does not expect to record a material gain or loss on the transaction.

At 1322 BST, the shares were up 0.9% to $9.73 in pre-market trade.