BP mulls sale of stakes in Canadian oil sands assets -sources


UPDATE 1-BP mulls sale of stakes in Canadian oil sands assets -sources

(Adds details on past oil sands sales, potential Husky
    By John Tilak and Nia WilliamsTORONTO/CALGARY, April 20 (Reuters) - BP Plc <BP.L> is
considering the sale of its stakes in three Canadian oil sands
projects, people familiar with the matter told Reuters this
week, as part of the British oil company's strategy of
retreating from noncore businesses.
    BP's 50 percent stake in the Sunrise project near Fort
McMurray in Alberta, where Husky Energy Inc <HSE.TO> owns the
rest and is the operator, is the most valuable of the three
assets. BP'S Sunrise stake is valued at about $810 million,
based on recent transactions in the sector.
    It also owns a 50 percent stake in Pike, operated by Devon
Energy Corp <DVN.N>, which is still awaiting a final investment
decision, and is majority-owner of the Terre de Grace oil sands
pilot project.
    A BP spokesman declined to comment. Sources declined to be
named as the information is confidential.
    The three projects are located in northeastern Alberta.
    BP has discussed with advisers the possibility of selling
the stakes, though no final decision has been made, the people
    If the sale proceeds, BP would deploy capital in more
attractive regions, such as the Permian basin in the United
States, where the rate of return tends to be higher, one of the
people said.
    BP's planned move comes after other global energy majors,
including ConocoPhillips <COP.N> and Royal Dutch Shell <RDSa.L>
have cut their exposure to Canada's oil sands operations, which
are among the world's most expensive oil plays to develop.
    Faced with a lower oil price environment and challenging
economics, which include high cost operations and carbon taxes,
global players are increasingly put off by the oil sands.
    Reuters reported last week that U.S. oil producer Chevron
Corp <CVX.N> was exploring the sale of its 20 percent stake in
Canada's Athabasca Oil Sands project, which could fetch about
$2.5 billion. [nL1N1HL0PQ]
    BP is focusing its operations in Egypt, Azerbaijan, the Gulf
of Mexico, the North Sea and Trinidad in the coming years.
    Husky said in February that current production at the
Sunrise project is about 36,000 barrels of oil per day. It is in
the process of ramping up the project to full capacity of 60,000
bpd but progress has been slower than expected and the company
is drilling extra wells to try to speed up production. Husky
lowered the 2017 production forecast to 40,000-44,000 bpd from
60,000 bpd.
    While Husky is not keen to increase its exposure to the oil
sands, it may consider buying BP's stake if the price is
attractive, two sources said.
    Husky spokesman Mel Duvall declined to comment on whether
the company had discussed buying BP's stake in Sunrise.
    "We take a look at everything, but we have a number of
organic growth opportunities," he added.
($1 = 1.3475 Canadian dollars)

 (Reporting by John Tilak in Toronto and Nia Williams in
Calgary; Additional reporting by Ron Bousso in London, Ethan Lou
in Calgary, Alberta; and David French in New York; Editing by
Denny Thomas and Matthew Lewis)
 ((john.tilak@thomsonreuters.com)(+ 1 416 687-7918)(Reuters
Messaging: john.tilak.reuters.com@reuters.net))


This article appears in: World Markets , Stocks , Economy , Technology , Oil
Referenced Symbols: BP , COP , CVX , DVN , RDSA

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