BP PLC (LON:BP.) said Tuesday that it has agreed to sell its entire business in Alaska to Hilcorp Energy Corp, one of the largest privately held oil and natural gas exploration companies in the US for a total consideration of $5.6bn.
In a statement released after the London market close, BP said the sale will include its entire upstream and midstream business in the state, including BP Exploration (Alaska) Inc., that owns all of BP's upstream oil and gas interests in Alaska, and BP Pipelines (Alaska) Inc.'s interest in the Trans Alaska Pipeline System (TAPS).
Commenting on the move, the oil giant’s group chief executive, Bob Dudley said ”we are steadily reshaping BP and today we have other opportunities, both in the US and around the world, that are more closely aligned with our long-term strategy and more competitive for our investment.”
He added: “This transaction also underpins our two-year $10 billion divestment programme, further strengthening our balance sheet and enabling us to pursue new advantaged opportunities for BP's portfolio within our disciplined financial framework.
"As a highly-capable operator with extensive Alaskan experience, Hilcorp is ideally-placed to take this important business on into the future, continuing to optimize its performance and maximize its value for the State of Alaska.”
Hilcorp Alaska will pay BP a consideration of $4.0bn in the near-term and $1.6bn through an earnout thereafter. Subject to state and federal regulatory approval, the transaction is expected to be completed in 2020.
The deal forms a significant part of BP's plan to divest $10bn of assets over 2019 and 2020.
Long Alaskan heritage
BP began working in Alaska in 1959, drilling the confirmation well for the Prudhoe Bay oilfield in 1968 and in the mid-1970s helped build the 800-mile Trans Alaska Pipeline.
The company began producing oil from Prudhoe Bay in 1977. BP's net oil production from Alaska in 2019 is expected to average almost 74,000 barrels a day.
Approximately 1,600 employees are currently associated with BP's Alaska business and BP is committed to providing clarity about their future as soon as possible as part of the transition process with Hilcorp.
Hilcorp has been operating in Alaska since 2012 and is today the largest private oil and gas operator in the state, currently operating more than 75,000 barrels of oil equivalent a day (boe/d) gross production. In 2014 Hilcorp purchased interests from BP in four operated Alaska North Slope oilfields.
Bob Dudley added: "Our exit from Alaska does not in any way diminish BP's commitment to America. We remain very bullish on the US energy sector. In just the last three years we have invested more than $20 billion in the US and we will continue to look at further investment opportunities here."
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