British energy giant
) has entered into an agreement with oil and gas producer
Plains Exploration & Production
) to sell oilfields in the Gulf of Mexico (GoM) for $5.5 billion.
In fact, BP agreed to sell almost all non-core field assets in the
region to cover anticipated damages for its 2010 Gulf oil spill.
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Per the deal, BP will sell its 100% interest in the Marlin hub,
100% interest in the Horn Mountain field and 50% stake in the
Holstein field. The deal also comprises BP's share in two
non-operated assets, Ram Powell (31%) and Diana Hoover (33.33%).
Last month, Bloomberg had reported that BP 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
However, considering that the GoM forms an important region for the
company, BP has no intention of withdrawing from the area 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.