BP is selling its upstream assets in the U.S., Canada and Egypt to Apache Corp., outlined in a number of agreements this week.
The deals together total $7 billion, and comprise BP’s Permian Basin assets in Texas and south-east New Mexico in the U.S.; its Western Canadian upstream gas assets; and the Western Desert business concessions and East Badr El-din exploration concession in Egypt.
“We have achieved an excellent price for a set of properties that are worth more to others than to BP,” said BP group chief executive Tony Hayward. “This is a good first step which underlines our ability and determination to get maximum value for everything we sell.”
The decision to make these divestments follows the announcement made by BP last month that it was increasing its target for divestments to $10 billion. BP expects to use the proceeds of the sales to increase the cash available to the group.
”Over the last two months the Board has considered BP’s options for generating the cash necessary to meet the obligations likely to arise from the Gulf of Mexico oil spill,” said BP Chairman, Carl-Henric Svanberg. “BP has an extremely strong asset base, which is diversified geographically as well as by asset class. The Board believes that there are opportunities to divest assets which are strategically more valuable to other parties than they are to BP.”
“This transaction provides a sustainable growth platform for Apache’s onshore North America operations as well as strategic infrastructure and exploration potential in Egypt,” added G. Steven Farris, Apache’s chairman and CEO. “We appreciate the opportunity and the professional manner in which BP employees conducted themselves. Their cooperation was a key ingredient for this transaction to come together.”
The aggregate proceeds for the deals is $7 billion, subject to customary post-completion price adjustments, such proceeds to be paid in cash. Each sale will take place through a separate agreement between BP and Apache, and none of the sales will be conditional on completion of any of the other sales occurring. Although each of the transactions is subject to certain regulatory approvals, it is expected that they will all be completed during the third quarter of 2010. Apache is expected to pay BP a cash deposit of $5 billion in aggregate on July 30, 2010.