BP approaches energy companies over potential $1b N Sea sell-off
NEW YORK: BP has sounded out a series of UKfocused energy companies about a potential sell-off of North Sea assets, Telegraph reported
According to the newspaper, the embattled oil and gas group is understood to have gone to utilities and oil companies to gauge their interest in the collection of assets worth in the region of $1bn.
According to companies and bankers, BP has approached parties on a "pretender" basis - before any official auction - to gauge the level of interest in a portfolio of non-core field, the paper added.
"We've been having a look at some gas assets, but it's very early on," said an executive at one energy company. "It's about seeing whether they'd be a good fit."
In the wake of the Deepwater Horizon oil spill, BP has pledged to sell of $30bn of assets to fund the clean-up and compensation for victims.
The company has raised $21bn of the $30bn in planned sales, which it said it would achieve before the end of the year.
In July, BP strongly denied that it has any plans to exit the North Sea entirely, where it has around $20bn of fields and a capital expenditure programme of $3bn.
However, speculation has since been mounting about an auction of low-margin fields, in common with other oil majors.
ExxonMobil is understood to be looking to sell a $2bn package of North Sea assets as the depleting fields are no longer so attractive to big companies that need to fund high dividends.
Companies who have said they are looking at the North Sea for potential acquisitions include Petrofac spin-off EnQuest, Danish giant Maersk and smaller production players like Ithaca Energy, plus British utilities like Centrica and Scottish & Southern.
The maturity of Britain's North Sea oil fields makes their growth prospects a lot less appealing to BP which has been chasing higher-margin oil exploration in areas like Brazil and the Gulf of Mexico.
Utility companies are less concerned with high return in the short term than with long term energy security, while oil and gas independents are better placed to milk assets for the duration of their lifetime.
"The North Sea contains more than 20bn barrels of oil and gas equivalent, but requires enormous amounts of investment," said Jim Hannon, of Hannon Westwood, the North Sea energy advisory company.
"Even the next phase of just 15pc of this figure from the higher priority discoveries will need more than $30bn in the next five years," Mr Hannon added. "The change of ownership through sales of existing production and potential development hubs to new entrant or emerging companies is one important ingredient in securing these development funds."
BP has already offloaded its 60pc stake in Argentina's oil and gas producer Pan American Energy with a $7.1bn price tag and sold a portfolio of North American and Egyptian assets to Apache Corporation for $10bn.
BP, whose shares closed up 3pc at 450p on Monday, declined to comment on the sell-off.
A spokesman said: "As we have previously indicated, the North Sea remains a hugely important part of BP globally, and we intend to sustain a significant business here for the long term. The company has a multi-billion pound investment programme over the next few years, centred on four major new field development projects in the UK and two in Norway."
Separately, Pakistan's biggest listed firm, the Oil and Gas Development Company (OGDCL), said it plans to bid for BP's gas assets in the Asian country with Pakistan Petroleum Ltd (PPL).
An OGDCL spokesman said a bid would be submitted imminently but did not give details of the pricing. The company is already a partner of BP in Pakistan. Analysts estimate the fields, previously linked to Premier Oil and Mubadala, the Abu Dhabi sovereign wealth fund, are worth around $500m.
Moreover, BP shares were the big winner among the integrated oil majors on Monday, gaining more than 3% in trading, albeit on average volume. Content on this page requires a newer version of Adobe Flash Player. BP was the only company among the global oil majors with a gain above 1% on the first day of the week.
The price of crude oil continued to flirt with the $90 mark --though it wasn't moving any higher on Monday -and the energy sector's oneday gain was ahead of the broad market, which was more or less flat after a losing morning. Oil sector companies have been reaching annual highs as the price of crude has climbed higher. Last Friday, several oil sector companies, including Halliburton(HAL), BakerHughes(BHI) and Schlumberger(SLB) finished the week at annual high share prices. Among BP's integrated oil peers, Exxon Mobil(XOM) and ConocoPhillips(COP) have gained 16% over the past three months. -PB News