BP to Sell Alaska Assets to Hilcorp for $5.6B

The deal is part of the U.K. oil giant’s plan to raise $10 billion in the next two years.
Lauren MuskettAugust 28, 2019
BP to Sell Alaska Assets to Hilcorp for $5.6B

U.K. oil giant BP has reached an agreement to sell its Alaskan assets to Hilcorp Energy for $5.6 billion.

Under the terms of the agreement, BP will receive an initial $4 billion payment and $1.6 billion in earnout payments over time.

BP has operated in Alaska for 60 years, holding interests in the Prudhoe Bay oil fields and the 800-mile Trans Alaska Pipeline, but it is exiting the region with the deal. Prudhoe Bay has produced more than 13 billion barrels of oil but has been in decline since the 1980s.

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Privately held Hilcorp will also acquire BP’s entire upstream and midstream business in the state, including BP Exploration.

“This deal vaults Hilcorp to be the second-largest Alaska producer and reserves holder, behind only ConocoPhillips,” Rowena Gunn, an energy analyst at Wood Mackenzie said.

BP said the sale is part of its plan to raise $10 billion over the next two years and strengthen its balance sheet following the 2018 acquisition of BHP’s U.S. shale assets, a $10.5 billion deal.

“This transaction also underpins our two-year $10 billion divestment program, further strengthening our balance sheet and enabling us to pursue new advantaged opportunities for BP’s portfolio within our disciplined financial framework,” BP group chief executive Bob Dudley said in a statement.

In June, BP said it had agreed to sell its interests in Gulf of Suez oil concessions in Egypt to Dragon Oil, where it had invested about $12 billion in the previous four years. Financial details of that transaction were not disclosed.

The company said it has about 1,600 employees in its Alaska business. In a statement to the Associated Press, Justin Furnace, a vice president for Hilcorp Energy, said plans for the BP workforce “will develop as we determine how we will integrate the acquisition into Hilcorp’s existing operations.”

The deal must still be approved by state and federal regulators.

Edwin Remsburg/VW Pics via Getty Images

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