Executives with London-based oil giant BP said its plans to sell interests in four fields atop Alaska could bring it up to $1.5 billion as part of a global effort to divest $10 billion in assets by the end of 2015.
BP announced the deal with Hilcorp, an independent oil company operating in Cook Inlet, last month. But the companies did not provide financial details of the deal, which must meet the approval of state and federal regulators and is expected to close by the end of the year.
However, in a recent conference call, BP executives said the sale was worth $1.25 billion, and also may include an additional $250 million related to the sale of half BP's interest in the challenging Liberty Field in the Beaufort Sea.
The money is part of more than $3 billion in deals the company has pursued in its effort to reach its money-raising goal, according to a transcript of the discussion.
The divestment of the Alaska assets shows BP is "unlocking value today" and allowing the company to "focus on value over volume into the future," according to Bob Dudley, BP's chief executive.
That statement might rub some Alaskans the wrong way: The state is currently running a huge deficit and trying to increase oil production in Alaska to help pay the bills, including with a new oil tax cut that advocates say will lead to new development.
However, Dudley also said during the call that the deal will allow BP to focus on getting the most oil out of the giant Prudhoe Bay oil field, where BP did not sell any of its assets. And in an April 22 statement announcing the sale, BP noted that it "remains committed to its plans for increased investment at Prudhoe Bay" due to oil tax reform.
As part of the deal, executives noted that up to $250 million was part of a "development carry" at the Liberty Field. BP will remain as operator at Liberty and plans to submit a development plan by the end of the year, BP said.
The 'development carry' means that Hilcorp pays BP's costs of developing the field, up to a $250 million cap, said Dawn Patience, a BP spokesperson, in an email.
In its sale announcement, BP said the sale of its Alaska assets, in addition to Liberty, also includes 100 percent of BP's interest in the Endicott and Northstar oilfields, as well as a 50 percent interest in the Milne Point fields.
"This deal will concentrate our operating footprint and we expect it to drive higher activity into the basin," meaning Prudhoe Bay, Dudley said. "This enables us to focus more intensely on maximizing production from Prudhoe Bay, North America's largest oil field, as well as progressing the Alaska LNG opportunity."
Contact Alex DeMarban at firstname.lastname@example.org.
By ALEX DEMARBAN