BP to sell some of its oil and gas fields in the Gulf

BP HAS agreed to sell some of its oil and gas fields in the US Gulf of Mexico to Plains Exploration and Production for $5.5 billion, bringing it a big step closer to its target of $38 billion in asset disposals by the end of 2013.

The British energy company said it was selling its interests in a number of fields it operates in the Gulf – Marlin, Dorado, King, Horn Mountain and Holstein – as well as stakes in two non-operated assets. BP announced in May that it planned to sell the fields, saying they were non-strategic.

The properties were producing the equivalent of 59,500 barrels of oil a day in July.

The US group also said it was acquiring Royal Dutch Shell’s 50 per cent interest in the Holstein field for $560 million.

The sale is part of BP’s plan to restructure and raise cash to pay the costs of the 2010 Deepwater Horizon disaster. In a statement, the group said the divestment was in line with its global strategy “of playing to its strengths, including the development of giant fields and deepwater exploration”.

It said it also reflected its greater focus on “producing more high-margin barrels from fewer, larger assets”.

Bob Dudley, BP’s chief executive, said the company would continue to invest at least $4 billion in the Gulf of Mexico annually over the next decade. BP operates four huge production platforms in the Gulf – Thunder Horse, Atlantis, Mad Dog and Na Kika – which it will retain. It has six drilling rigs there and expects to have eight in place by the end of the year.

The acquisition is an ambitious move for Plains, which had a market capitalisation of $5.2 billion at Friday evening’s closing share price. The parties expect the deal to close by the end of the year.

The disposal takes BP’s total disposals since the Gulf of Mexico oil spill to more than $32 billion.

Also on the block is BP’s Texas City refinery that is scheduled to be sold by the end of the year. It emerged last week that the US Department of Justice had confirmed in a court filing its intent to prove that BP had acted with gross negligence in the run-up to the explosion on the Deepwater Horizon, indicating it was seeking penalties many times greater than the $3.5 billion provision so far set aside by BP. – (Copyright The Financial Times Limited 2012)