) plans to offload a group of Gulf of Mexico (GoM) oilfields,
reflecting its effort to raise capital while divesting its assets
following the 2010 catastrophic oil spill in the region. According
to a Bloomberg report, the company is looking for around $7.9
billion (before tax payments) for the oilfields.
The to-be-sold properties include the Horn Mountain, Holstein,
Diana Hoover and Ram Powell fields with proven reserves of about
120 million barrels of oil. During the first quarter, these fields
generated 58,000 barrels of oil.
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 companies like
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BP − the second largest oil company following
Royal Dutch Shell Plc
) − remains committed to continue investing at least $4 billion
annually in the Gulf region over the next decade.
The GoM region marks the most profitable area in BP's portfolio and
hence the company remains upbeat on fields like Thunder Horse,
Atlantis, Mad Dog and Na Kika. Presently, six rigs remain
operational in the region and BP expects to have eight by the end
Recently, BP plans to sell its California oil refinery and 800
statewide gas stations to refining giant
) for $2.5 billion. This brings its total divestitures to about
$26.5 billion since the announcement of the divestiture program in
We believe the company's strategy of offloading its non-core
upstream properties will prove beneficial over time while creating
a portfolio with stronger growth from a smaller base. Additionally,
BP's focus on a string of upstream activities in high margin areas
like the GoM, Angola, the North Sea, Brazil, Australia and India
bode well for its future growth.
BP retains a Zacks #3 Rank, which is equivalent to a Hold rating
for a period of one to three months.