Written by Associated Press
(AP) — After decades of helping shape oil production in Alaska, BP announced Tuesday it is selling its assets in the state as it works to divest $10 billion worldwide.
The sale to Hilcorp Alaska, an affiliate of Texas-based Hilcorp Energy Co., would be worth $5.6 billion, and include interests in the Prudhoe Bay oil field, Point Thomson gas field and the trans-Alaska pipeline system, BP said in a release. Harvest Alaska, another Hilcorp affiliate, will acquire BP’s stake in the pipeline.
The sale, subject to approval by state and federal agencies, comes as BP attempts to divest $10 billion in assets by 2020. Meg Baldino, a BP spokeswoman, said the company earlier announced $1.5 billion in divestments.
Analysts and observers Tuesday said they weren’t surprised by the announcement. Bruce Bullock, director of the Maguire Energy Institute at Southern Methodist University, said he sees “at least some mild upside.”
He said Hilcorp will want to invest more money to keep the assets producing longer.
Michael Noel, an associate professor of economics at Texas Tech University, said it’s good to see another company excited about the profit opportunity in BP’s assets. But he said there’s also uncertainty, including around jobs and the markets.
“The ownership matters but the price of oil matters so much more,” he said.
Exxon, BP and ConocoPhillips have long been seen as the major players on the North Slope.
BP’s history in Alaska dates to 1959. The company began producing oil from the prodigious Prudhoe Bay in 1977.
Janet Weiss, regional president for BP Alaska, said Tuesday’s announcement marks the start of an exciting new chapter for Prudhoe.
“Our people have achieved incredible success over the decades developing and maintaining these hugely important assets, but we are confident this sale is in BP’s and the state’s best interests and the business will be best positioned for the future with Hilcorp,” she said in a release.
Jason Rebrook, president of Hilcorp Energy Co., in a statement said the company has a record of “bringing new life to mature basins, including Alaska’s Cook Inlet and the North Slope, and we have a clear understanding that an experienced local workforce is critical to success.”
Larry Persily, a former federal coordinator for Alaska gas projects, said Hilcorp has made a mark by picking up projects others moved away from and “wringing more money out of them,” citing Cook Inlet as an example.
Justin Furnace, a vice president for Hilcorp Energy Co., said in an email to The Associated Press that plans for the BP workforce “will develop as we determine how we will integrate the acquisition into Hilcorp’s existing operations.” BP employs about 1,600 workers in Alaska.
Under terms of the agreement, Hilcorp will pay $4 billion in the near-term and $1.6 billion later. Both companies expected the deal to close some time next year.