British energy giant
) is close to a $7 billion pact related to the divestment of its
Gulf of Mexico (GoM) offshore oil fields to Houston-based
Plains Exploration & Production Company
), according to the Wall Street Journal report.
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As discussions are ongoing, the announcement of a deal by this week
is likely, unless negotiations turn unfavorable. The GoM assets
have raised significant interest among numerous bidders.
Last month, Bloomberg had reported that plans to offload a group of
GoM oilfields, reflecting its effort to raise capital while
divesting its assets following the 2010 catastrophic oil spill in
the region. The deal is all part of BP's plan to retain its
flexibility while reshaping its U.S. operations by releasing up to
5 billion to 6 billion in cash, after taxes, to pay down its
liabilities. Prospective bidders could include major U.S. energy
BP executives had stated that it intends to offload interests in a
number of Gulf based oil fields - Marlin, Horn Mountain, Ram Powell
and Diana Hoover - considered to be strategic misfit. As GoM forms
an important region for the company, BP has no intention of
withdrawing from the region despite the asset sale.
BP had obtained 43 new drilling leases in GoM in June 2012. The
company plans to strengthen its Gulf operations around four large
production hubs and is likely to employ eight oil rigs in the area
by the end of 2012.
Following the oil spill in 2010, which killed 11 workers and spewed
more than 200 million gallons of crude, BP is striving to improve
its revenue flow. BP's ongoing negotiations are in line with its
divestment program that sees the British major getting rid of its
mature, non-core upstream assets to create a portfolio with
stronger growth potential from a smaller base.
BP is set to divest around $38 billion worth of assets by 2013, of
which it has contracted to sell assets valued at nearly $26.5
billion till date. This includes last month's sale of a Southern
California refinery and associated assets to
) for $2.5 billion.
BP carries a Zacks #3 Rank, which is equivalent to a Hold rating
for a period of one to three months.