It News: BP in Deal to Sell Some Gulf Fields

September 10, 2012

BP in Deal to Sell Some Gulf Fields

September 10, 2012
By ANUPREETA DAS, RYAN DEZEMBER and ALEXIS FLYNN

BP BP +1.79% PLC reached a deal to sell some of its Gulf of Mexico offshore oil fields to Plains Exploration & Production Co. PXP +1.41% for $5.55 billion, as BP continues to divest itself of assets to pay for the 2010 oil spill in the region.

The properties sold include the Marlin, Dorado and King fields, the Horn Mountain field, the Holstein field, as well as the Diana-Hoover field, which is operated by ExxonMobil Corp., XOM +1.05% and the Ram Powell field, which is operated by Royal Dutch Shell RDSB.LN +0.22% PLC unit Shell Offshore Inc., Plains said in a statement Monday.

Plains also said it concluded a separate deal with Shell to buy its controlling stake in Holstein for $560 million.

U.K.-based BP, among the largest global oil producers, has been selling off assets to help pay for cleanup and other costs related to the April 2010 drilling-rig explosion that killed 11 people and resulted in a massive oil spill. Of about $38 billion in assets earmarked for sale, BP has so far agreed to sell about $32 billion

worth, including Monday's deal with Plains and an agreement last month to sell a Southern California refinery and related assets to Tesoro Corp. TSO +1.47% for $2.5 billion.

The company has emphasized that the Gulf asset sales aren't a sign of retreat from the region, which BP has invested in since the 1980s and considers an important area. In June, the company acquired 43 new drilling leases there, and has said it will consolidate its Gulf operations around four large production hubs. BP plans to have eight oil rigs drilling in the Gulf by the end of 2012.

The transaction is a big bite for Plains, a Houston-based independent oil explorer and producer. The company's market capitalization was $5.2 billion as of Friday. Plains is expected to take on debt to pay for the deal, one of the people familiar with the matter said. Plains mainly develops and produces oil and natural gas in California, Texas, Louisiana, the Rocky Mountains and the Gulf of Mexico.

Founded in 2002, Plains focuses on mature oil fields with existing reserves as well as new properties that can be developed. The BP oil fields it is planning to buy are considered mature, fitting in with the company's overall strategy.

In the oil-spill disaster, an explosion on the Deepwater Horizon drilling rig touched off the largest offshore oil spill in U.S. history. In July, BP reported a steep drop in second-quarter profit as it wrote down the value of some U.S. assets and analysts said its performance continued to suffer due to the spill. The company's overhaul of safety standards has meant major repair work at many of its offshore operations, which has raised costs and cut production.