UK oil and gas supermajor
) has decided to farm out four operated oilfields on the North
Slope of Alaska to privately held Hilcorp. The parties, however,
did not reveal the financial terms of the transaction.
The sale agreement comprises the entire interest of BP in the
Endicott and Northstar oilfields and a 50% stake in each of the
Liberty and the Milne Point fields. Included in the
agreement is BP's interest in the oil and gas pipelines related
to these fields.
BP owns nearly 100% interest in all the fields related to the
sale. Located about three miles offshore, Endicott is an
) hold 21% and 11%, respectively.
The transaction will facilitate BP to form a more competitive and
viable business in Alaska as well as help it in utilizing its
greatest strengths of managing giant fields and gas value chains.
BP intends to concentrate on the development and production from
the giant Prudhoe Bay field and work on the progress of future
opportunity of Alaska LNG.
BP's position as operator and co-owner of the Prudhoe Bay and its
other stakes in Alaska remains unaffected consequent to the
agreement. The transaction, subject to regulatory approval, will
enable Hilcorp to become the operator of the Endicott, Northstar
and Milne Point oilfields and their associated pipelines and
BP, which retains the operatorship of Liberty, is expected to
submit a development plan for it by the end of 2014. Discovered
in 1997, Liberty is estimated to hold estimated recoverable
reserves of 100 million barrels of oil. The work on the field was
suspended in 2012 due to huge cost overruns.
BP's plan for Prudhoe Bay oilfield involves the addition of a
pair of drilling rigs - one in 2015 and another in 2016,
respectively. Over the next five years, the company plans to
spend $1 billion more.
The sold assets together represent about 19,700 barrels of oil
equivalent per day of net production, or around 15% of BP's total
net production on the North Slope.
BP carries a Zacks Rank #3 (Hold). A stock in the oil and gas
industry looking good with the Zacks Rank #1 (Strong Buy) is
Range Resources Corp
BP PLC (BP): Free Stock Analysis Report
CHEVRON CORP (CVX): Free Stock Analysis
RANGE RESOURCES (RRC): Free Stock Analysis
EXXON MOBIL CRP (XOM): Free Stock Analysis
To read this article on Zacks.com click here.