HOUSTON – BP has agreed to sell its entire business in Alaska to Hilcorp Alaska for a total consideration of $5.6 billion.
The sale will include the company’s entire upstream and midstream business in the state, including BP Exploration (Alaska) Inc., which owns all of its upstream oil and gas interests in Alaska, and BP Pipelines (Alaska) Inc.’s interest in the Trans Alaska Pipeline System.
Subject to state and federal regulatory approval, the transaction is expected to be completed in 2020. The deal forms a significant part of the company’s plan to divest $10 billion of assets over 2019 and 2020.
Upstream oil and gas interests included in the transaction:
Prudhoe Bay, 26% (operator BP)
Milne Point, 50% (operator Hilcorp)
Point Thomson, 32% (operator ExxonMobil)
Liberty project, 50% (operator Hilcorp)
Non-operating interests in exploration leases in the Arctic National Wildlife Refuge.
Midstream pipeline interests included in the transaction:
Trans Alaska Pipeline System, 49%
Alyeska Pipeline Service Co., 49%
Point Thomson Export Pipeline, 32%
Milne Point Pipeline, 50%.
Prince William Sound Oil Spill Response Corp., 25%.
In 2014, BP divested its interests in the Endicott and North Star fields and half its interests in the Milne Point and Liberty fields to Hilcorp.
In 2018, BP sold its interest in the Kuparuk field to ConocoPhillips.
Wood Mackenzie analyst Rowena Gunn said: “This is an important deal for Alaska as it changes the operator of the flagship Prudhoe Bay field. Growth is coming westward from ConocoPhillips- and Oil Search-operated projects. But all North Slope barrels rely on the infrastructure established at Prudhoe Bay.”
Hilcorp entered Alaska Cook Inlet in 2011 and the North Slope in 2014. The company holds interests in 31 assets across the Cook Inlet and North Slope – producing 41,000 boe/d.
Gunn said: “This deal vaults Hilcorp to be the second-largest Alaska producer and reserves holder, behind only ConocoPhillips. Continued investment in maintaining Prudhoe Bay will be the company`s main endeavor.
“But the assets are not without upside. A 2019 3D seismic campaign will reveal further targets to prolong the legacy field while the company is also growing Milne Point production and considering a potential FID at the Liberty field (now 100% owned).”
She added: “This will not be the last deal in the region. ExxonMobil may be next to follow BP, Anadarko, Pioneer, and Marathon in the list of companies having sold out of Alaska. So far ConocoPhillips and Hilcorp have played the consolidating roles – now controlling over 72% of Alaska’s production.”