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Wednesday, August 28, 2019 - 3:05:13 PM
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Mining News Pro - Privately held exploration and production company Hilcorp has sealed a $5.6-billion deal to acquire British major BP’s entire upstream and midstream business in the US state of Alaska.
The sale will include BP Exploration (Alaska) that owns all of BP`s upstream oil and gas interests in the northern US state, and the BP Pipelines (Alaska) interest in the Trans Alaska Pipeline System (TAPS).
The deal marks a change of ownership of the Prudhoe Bay field. The giant oilfield – the most prolific in US history – has to date produced more than 13-billion barrels of oil and is estimated to have the potential to produce a further one-billion barrels.
"Today`s announcement marks the start of an exciting new chapter for Prudhoe Bay. Alaska has been a core part of BP for 60 years and saying goodbye will not be easy,” BP regional manager Janet Weiss said in a media statement.
Wood Mackenzie analyst Rowena Gunn valued the assets at a "slight premium" to the $5.6-billion consideration.
“Prudhoe Bay makes up over 60% of the consideration, but other assets like TAPS, Milne Point and Point Thomson are significant at over $2-billion NPV10 [net present value].”
This deal vaults Hilcorp, which is currently operating 75 000 bbl/d of oil equivalent gross production, to second-largest Alaska producer and reserves holder after ConocoPhillips.
BP`s net oil production from Alaska in 2019 is expected to average almost 74 000 bbl/d. BP operates Prudhoe Bay, with a working interest of 26%, and holds non-operating interests in the producing Milne Point and Point Thomson fields. It also holds non-operating interests in the Liberty project and exploration lease interests in the Arctic National Wildlife Refuge. In addition to shares in TAPS and its operator the Alyeska Pipeline Service Company, BP is divesting its midstream interests in the Milne Point Pipeline and the Point Thomson Pipeline.
In 2014, Hilcorp purchased interests from BP in four operated Alaska North Slope oilfields.
The deal, which is expected to be completed next year, forms a significant part of BP`s plan to divest $10-billion of assets over 2019 and 2020.
"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," said BP group CEO Bob Dudley.
Between 2005 and 2018, BP invested more than $115-billion in its US energy assets. In the second quarter, BP`s net oil and gas production from the US averaged more than 921 000 bbl/d of oil equivalent, from major interests in Alaska, onshore Lower 48 and deepwater Gulf of Mexico.
Late last year, the major acquired a portfolio of onshore US oil and gas interests from global mining firm BHP for $10.5-billion, adding 190 000 bbl/d oil equivalent production.
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