BP has agreed to deal its interest in four operated oilfields on Alaska’s North Slope to Hilcorp, a private U.S. E&P.

The net asset value for the assets is an estimated $2.6 billion, or 1.7% of BP’s market cap, Tudor, Pickering, Holt and Co. said. The sale price was not disclosed.

The sale agreement, announced April 22, includes all of BP’s interests in the Endicott and Northstar oilfields and a 50% interest in each of the Liberty and the Milne Point fields. The sale also includes BP’s interests in the oil and gas pipelines associated with these fields.

BP’s sale is part of a plan to divest $10 billion by the end of 2015. The integrated company will also be able to focus more intently on its other Alaska assets. The asset sale produces about 19,700 net barrels of oil equivalent per day (boe/d), less than 15% of BP’s total net production on the North Slope.

“There are some big benefits from this transaction,” said Janet Weiss, president of BP’s Alaska region. “BP will be able to focus on maximizing production from Prudhoe Bay and advancing the Alaska LNG opportunity. Hilcorp takes ownership of two mature oil fields ready for new investment and activity, and it will operate a third field that is primed for accelerated production. And, the state gets another accomplished operator working the North Slope. Thanks to tax reform, Alaska is now on course for increased investment and production and even the possibility of LNG.”

BP has increased investment at Prudhoe Bay after recent oil tax reforms by Alaska. BP plans to add two drilling rigs, one in 2015 and a second in 2016 for a total incremental $1 billion investment over five years. The additional spending is expected to account for 200 Alaska jobs and 30-40 additional wells being drilled each year, bringing a boost to both the company’s operations and the state’s economy, BP said.

The sale should be completed after it wins state and federal approval by the end of 2014. Hilcorp is expected to become the operator of the Endicott, Northstar and Milne Point oilfields and their associated pipelines and infrastructure. Hilcorp is one of the largest independent oil and natural gas E&P companies with operations in the Gulf Coast of Texas and Louisiana, Northeast US and Alaska's Cook Inlet.

BP is one of the largest oil producers in Alaska, and BP-operated oil fields account for two-thirds of all Alaska production. Production from Prudhoe Bay averaged 73,000 barrels of oil per day net to BP in 2013, said Jeff Dietert, managing director, Simmons & Co. International.

Prudhoe Bay is the largest oil field in North America. BP’s Alaska North Slope assets include ownership in the Greater Kuparuk Area, Point Thomson and the Trans Alaska Pipeline System. BP’s Alaska operations currently support the jobs of 2,300 Alaska employees and more than 20,500 additional Alaska jobs.

Comments