BP to Exit Alaska With $5.6 Billion Sale
28 August 2019 - 5:29AM
Dow Jones News
By Miguel Bustillo
BP PLC is exiting Alaska after six decades, selling all of its
assets to Hilcorp Energy Co. for $5.6 billion.
The British oil company's departure marks the latest blow to the
Alaskan oil sector, which has lost influence globally and
domestically as the rise of shale drilling in the continental U.S.
has diminished interest in Alaskan operations and exploration.
Under the deal, Hilcorp affiliate Hilcorp Alaska will acquire
all of BP's assets in the state, including its share of the giant
Prudhoe Bay oil field, and its interests in the Trans-Alaska
Pipeline System. Houston-based Hilcorp, which is privately held, is
Alaska's largest private operator.
"Alaska has been instrumental in BP's growth and success for
well over half a century and our work there has helped shape the
careers of many throughout the company," BP Chief Executive Bob
Dudley said.
"However, 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," he added.
Hilcorp will pay BP $4 billion in the short term and a $1.6
billion earnout from the assets afterward, the company said. The
deal is subject to state and federal approval, and the companies
expect it to close by next year.
"Energy is a cornerstone of the Alaskan economy and this
investment will help drive growth in local energy production, jobs
and state and local revenue for many years to come," said Hilcorp
Energy President Jason Rebrook. "Hilcorp has a proven track record
of bringing new life to mature basins."
The sale is part of a larger BP initiative to divest $10 billion
in assets over 2019 and 2020, the company said.
BP said it started working in Alaska in 1959. It drilled the
initial confirmation well for the Prudhoe Bay oil field in 1968,
and began producing oil from it in 1977. The oil field has to date
pumped 13 billion barrels, making it the most prolific in American
history, the company said. BP has remained its operator and
currently has a 26% working interest in the field.
BP was one of the key players behind the construction of the
800-mile Trans-Alaska Pipeline in the 1970s, and said it owns
exploration lease interests in the Arctic National Wildlife Refuge,
among other holdings.
But the company's production in the region has fallen over time.
BP estimates its net oil production from Alaska will average 74,000
barrels a day this year.
Write to Miguel Bustillo at miguel.bustillo@wsj.com
(END) Dow Jones Newswires
August 27, 2019 15:14 ET (19:14 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
BP (NYSE:BP)
Historical Stock Chart
From Apr 2024 to May 2024
BP (NYSE:BP)
Historical Stock Chart
From May 2023 to May 2024