BP Plc
(
BP
) has inked an asset sale agreement with the Japanese trading
company Mitsui & Co. for its minority shares in two North Sea
fields. This $280 million, all in-cash transaction marks the
British oil giant's effort to concentrate more on larger scale
projects in the region.
BP - U.K.'s second largest oil company by market value following
Royal Dutch Shell Plc
(
RDS.A
) - will divest a 13.3% stake in Alba field and 8.97% stake in
Britannia filed. The fields produce around 7,000 barrels equivalent
of oil and gas per day.
The deal, which is scheduled to close in the third quarter of
this year, allows BP to refocus on the core areas of its North Sea
portfolio comprising six key projects in the Norwegian and British
parts.
Earlier this year, the company entered into an asset disposal
agreement with Perenco UK Ltd to sell its share in its southern gas
assets in the UK North Sea. The divestiture includes the Cleeton
stream fields, the West Sole stream fields, the Amethyst field and
the Dimlington terminal that together produce 25,000 barrels of oil
equivalent a day. The $400 million all in-cash transaction is
expected to be completed before the end of 2012, pending subject to
customary closing conditions. Perenco has already paid $100
million, and the balance will be paid upon the completion of the
contract.
The latest divestiture follows an accord to offload its
operations in Wyoming to
LINN Energy, LLC
(
LINE
) in a $1 billion all-cash deal to help pay for the catastrophic
2010 Gulf of Mexico (GoM) oil spill. The sale comprises more than
12,500 acres in the Jonah field, which is located in the Green
River Basin of southwest Wyoming.
All these asset sales are part of BP's divestiture plan,
announced following the Deepwater Horizon disaster in the GoM two
years back. The company has a fund-raising objective of about $38
billion by the end of next year and with this latest North Sea
divestment, it has already accumulated more than $24 billion since
the start of 2010.
We believe the company's endeavor in disposing of its non-core
upstream properties will likely create a portfolio, with
potentially 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.
We maintain our long-term Neutral recommendation for BP, which
holds a Zacks #3 Rank (short-term Hold rating).
BP PLC (BP): Free Stock Analysis Report
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