BP today announced that it has agreed to sell interests in four BP-operated oilfields on the North Slope of Alaska to Hilcorp. The sale agreement includes all of BP’s interests in the Endicott and Northstar oilfields and a 50 percent interest in each of the Liberty and the Milne Point fields. The sale also includes BP’s interests in the oil and gas pipelines associated with these fields.
“This agreement will help build a more competitive and sustainable business for BP in Alaska” said BP Upstream Chief Executive Lamar McKay. “It will allow us to play to two of our great strengths, managing giant fields and gas value chains. We will now concentrate on continuing development and production from the giant Prudhoe Bay field and working to advance the future opportunity of Alaska LNG.”
The agreement does not affect BP’s position as operator and co-owner of the Prudhoe Bay oilfield nor its other interests in Alaska. BP also expects to submit a development plan for Liberty, located on federal leases about six miles offshore in the Beaufort Sea and east of the Prudhoe Bay, by the end of 2014. As a result of the sale and subject to approval, Hilcorp is expected to become the operator of the Endicott, Northstar and Milne Point oilfields and their associated pipelines and infrastructure.
“There are some big benefits from this transaction,” said Janet Weiss, President of BP’s Alaska Region. “BP will be able to focus on maximizing production from Prudhoe Bay and advancing the Alaska LNG opportunity. Hilcorp takes ownership of two mature oil fields ready for new investment and activity and it will operate a third field that is primed for accelerated production. And, the state gets another accomplished operator working the North Slope. Thanks to tax reform, Alaska is now on course for increased investment and production and even the possibility of LNG.”
BP said it remained committed to its plans for increased investment at Prudhoe Bay, which have resulted from recent oil tax reform by the State of Alaska. The plans include adding two drilling rigs, one in 2015 and a second in 2016, for a total incremental $1 billion investment over five years. These activities are expected to account for 200 Alaska jobs and 30-40 additional wells being drilled each year, bringing a boost to both the company’s operations and the state’s economy.
Approximately 250 employees are associated with the assets included in the agreement and the company is committed to providing clarity about their future as soon as possible. The majority of those BP employees at or supporting Milne Point, Endicott and Northstar are expected to be offered positions with Hilcorp with no break in employment. Endicott is located about three miles offshore. Endicott started production in 1987 and was the first continuously producing offshore field in the Arctic.
Together the assets included in the sale represent approximately 19,700 barrels of oil equivalent a day (boe/d) of net production for BP, less than 15 percent of BP’s total net production on the North Slope.
The sale, which will be subject to state and federal regulatory approval, is anticipated to be complete by the end of the year. Financial details of the transaction are not being disclosed.