BP agrees to sell $7bn in assets to US Apache as spill costs rise

20 July 2010 22:13  [Source: ICIS news]

HOUSTON (ICIS news)--BP has agreed to sell $7bn (€5.4bn) of upstream assets in the US, Canada and Egypt to US oil and gas producer Apache as part of a plan to pay off surging liabilities from the Gulf of Mexico oil spill, the company said on Tuesday.

The divestments were part of a plan by BP to sell off $10bn in assets to increase cash available to the company. BP said on Monday that cleanup costs had increased to $3.95bn.

“We have achieved an excellent price for a set of properties that are worth more to others than to BP,” chief executive Tony Hayward said.

Following the announcement, BP's stock rose 47 cents, or 1.3%, to $35.67/share in after-hours electronic trading at the New York Stock Exchange.

The sale included $3.1bn for Permian Basin oilfields in west Texas and southeast New Mexico, which have a combined daily production of 15,100 bbl of liquids and 80m cubic feet of gas, BP said.

The company also said it sold western Canada gas assets with a combined daily production of 240m cubic feet of gas and 6,500 bbl of liquids for $3.25bn.

Additionally, Apache acquired BP’s business and exploration concessions in Egypt for $650m, with daily net production at 6,016 bbl of oil and 11m cubic feet of gas.

“Over the last two months, the [BP] board has considered BP’s options for generating the cash necessary to meet the obligations likely to arise from the Gulf of Mexico oil spill,” BP chairman Carl-Henric Svanberg said.

“Today’s announcement is the first such transaction,” he added.

A BP spokesman also said that the company would sell gas fields and an associated pipeline and terminal in Vietnam, worth about $1bn according to reports.

However, that deal had yet to be finalised.

BP’s cutbacks as a result of its Gulf of Mexico spill spending already included a suspension of first, second and third quarter interim dividends and a significant reduction in capital expenditures, the company said.

Meanwhile, at the spill site, BP received clearance from US authorities to keep its containment cap closed over the blown-out well until at least Wednesday.

US officials would continue analysing conditions of the well on a daily basis and whether it would need to be re-opened to relieve pressure at other points in the well, according to US Coast Guard Admiral Thad Allen.

Allen said officials continued to believe that recent oil seepage in the vicinity of the well was unrelated to the cap. BP has said since the 15 July closure of the cap that no oil WAS escaping into the Gulf.

BP officials noted that pressure readings were continuing to slowly rise near the top of the well, which Allen said was encouraging.

Prior to the cap’s closure, US estimates of the leak had ranged from 35,000-60,000 bbl/day following the 20 April explosion of the BP-operated Deepwater Horizon offshore rig.

($1 = €0.77)

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By: Ben DuBose
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