Breaking News
0

BP to quit Alaska after 60 years with $5.6 billion sale to Hilcorp

Stock MarketsAug 27, 2019 04:05PM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters. FILE PHOTO: A road and the Trans Alaska Pipeline run past a mountain in northern Alaska

By Ron Bousso and Tanishaa Nadkar

(Reuters) - British oil major BP Plc (L:BP) on Tuesday agreed to sell all its Alaskan properties for $5.6 billion to privately held Hilcorp Energy Co, exiting a region where it operated for 60 years.

The deal, which includes interests in the most prolific oil field in U.S. history at Prudhoe Bay, and the 800-mile (1,300-km) Trans Alaska Pipeline, is part of BP's plan to raise $10 billion over the next two years through asset sales to further strengthen its balance sheet, it said.

For years, BP has been reducing its role in Alaska, where oil production for fallen with declines at the Prudhoe Bay field. BP, which began working in Alaska in 1959, is the operator and holds a 26% stake in Prudhoe, where production began in 1977.

In 2014, BP sold Hilcorp half its share of an Alaskan project. This year, the two were due to decide whether to go ahead with an ambitious $1.5 billion offshore project that requires construction of a manmade island.

The acquisition fits Hilcorp's historical strategy of acquiring mature fields from major oil companies and slashing costs. The company, founded in 1990 by Texas oilman Jeffery Hildebrand, has operations across the United States.

A Hilcorp spokesman did not reply to a request for comment.

“This deal vaults Hilcorp to be the second-largest Alaska producer and reserves holder, behind only ConocoPhillips (N:COP)," said Rowena Gunn, a Wood Mackenzie energy analyst. Hilcorp must show it can maintain output at Prudhoe Bay, where BP has been the operator, she said.

Prudhoe has to date produced over 13 billion barrels of oil and is estimated to have the potential to produce more than one billion further barrels. BP's net oil production from Alaska in 2019 is expected to average almost 74,000 barrels per day.

The deal calls for a $4 billion initial payment to BP with the remaining $1.6 billion in earnout payments over time.

"We are steadily reshaping BP and today we have other opportunities, both in the U.S. and around the world, that are more closely aligned with our long-term strategy and more competitive for our investment," BP Chief Executive Officer Bob Dudley said.

The Alaska sale pushes BP closer to its goal of selling $10 billion of properties following the 2018 acquisition of BHP's (AX:BHP) U.S. shale assets, a $10.5 billion deal that catapulted the London-based company into a major Texas shale producer.

BP previously had said that most of the disposals would come from its shale assets, particularly natural gas fields. The sale would help BP reduce its debt, which rose to 31% of its market capitalization by the end of June.

The sale faces regulatory approvals, including by the state of Alaska.

The divestment comes months after BP agreed to sell its interests in the Gulf of Suez oil concessions in Egypt to Dubai-based Dragon Oil for an undisclosed sum.

BP also said about 1,600 employees were currently part of its Alaskan business, adding that it was "committed to providing clarity about their future as soon as possible as part of the transition process with Hilcorp."

BP to quit Alaska after 60 years with $5.6 billion sale to Hilcorp
 

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email