With revenue sagging and pressure mounting to reduce its debt load, Venoco has agreed to sell an oil field near Oxnard for $200 million.
Venoco, which is based in Denver but has major operations and holdings on the South Coast, said in its quarterly report Aug. 19 that it has agreed to sell its stake in the West Montalvo field, a major natural gas site. Located near Gonzalez Road and Harbor Boulevard just outside Oxnard, parts of the field are visible from McGrath State Beach.
Venoco acquired the mostly idled field in May 2007 for $61.3 million and would gain about $138.7 million on the sale, excluding the money the firm spent re-working the field to bring wells back into production.
Venoco did not name the buyer. The move follows news of layoffs earlier this year.
The sale and job cuts are the lingering effects of the $471 million transaction in which Venoco founder Tim Marquez took the company private. The deal was financed with a mix of bonds and revolving credit lines and imposed financial terms that tighten over time. Venoco must keep its assets and liabilities evenly balanced, and its debts can’t exceed five and half times its pre-tax earnings, according to company filings.
Venoco projects that it will be in violation of those terms by the end of September, which could cause its lenders to immediately demand large payments. The company said it plans to ask for a waiver while the West Montalvo field transaction is pending.
“The sale is expected to be completed in October 2014 and Venoco expects to apply 100 percent of the net proceeds to reduce the principal balance outstanding on the revolving credit facility,” the company said Aug. 18 in securities filings.
The West Montalvo field is in the midst of being revitalized. The field has both onshore and offshore oil, all of which can be reached by offshore wells. The company had 37 producing wells on the site at the end of last year, most of which were existing wells that had been idle. Venoco was processing data from a 3D seismic survey when the sale of the field was announced.
For the first six months of 2014, Venoco’s revenue was down 22 percent to $129.1 million compared with a year earlier. Net income was $807,000 compared with $36.9 million the same period the previous year.