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The transaction turns
Hilcorp into the second-
largest producer in
Alaska, and also the
operator of Prudhoe
Bay.

Alaska approves part of

BP asset sale to Hilcorp

ALASKA OFFICIALS in Alaska have approved part of Hilcorp paid a $500mn deposit on signing the
the sale of BP’s portfolio in the state to privately agreement with BP in 2019. The revised agree-
owned Hilcorp Energy. The $5.6bn transaction ment includes “lower completion payments in
– which will mark BP’s exit from Alaska – was 2020, new cash flow sharing arrangements over
announced last year, and renegotiated earlier in the near term, interest-bearing vendor financing
2020 owing to changing market conditions and and, potentially, an increase in the proportion of
the collapse in oil prices. the consideration subject to earnout arrange-
The assets being sold include interests in the ments”, BP said in April.
giant Prudhoe Bay oilfield on the North Slope Alaska’s oil production has suffered in recent
and BP’s nearly 50% stake in the 800-mile (1,300- months as a result of the coronavirus (COVID-
km) Trans Alaska Pipeline System (TAPS). The 19) pandemic. In June, state data show output
approval this week covered the sale of BP’s 176 averaging 390,830 barrels per day, with Prudhoe
oil and gas leases in the state, while the transfer Bay and satellite fields accounting for 286,098 The transfer of
of the TAPS stake to Hilcorp is still pending, bpd. ConocoPhillips curtailed roughly 100,000
with a decision by the Regulatory Commission bpd of its Alaskan production in June. The com- the TAPS stake
of Alaska anticipated in September. pany announced on June 30 that based on its
The sale of the leases reportedly closed this economic criteria, it would begin restoring this to Hilcorp is still
week after receiving approval from Alaska’s curtailed output in July.
departments of Natural Resources and Envi- ConocoPhillips’ cutbacks in Alaska pending, with
ronmental Conservation. The transaction turns accounted for around 15% of its overall produc- a decision by
Hilcorp into the second-largest producer in the tion curtailments.
state after ConocoPhillips, and also the operator For BP, the sale of its Alaskan assets forms a the Regulatory
of Prudhoe Bay. significant part of a $15bn programme of asset
The Alaskan officials noted in their sales that it was previously targeting by mid- Commission
approval that Hilcorp has a record of buying 2021. On June 29, BP announced that it had met
and rejuvenating ageing fields while reducing this target a year early, having agreed to sell its of Alaska
expenses, and that it could apply these skills petrochemicals business to Ineos for $5bn. anticipated in
to operations on the North Slope. They wrote “This is another significant step as we stead-
that the sale involves “some risk and potential ily work to reinvent BP,” CEO Bernard Looney September.
liability to the state”, but that its benefits out- said. The super-major recently unveiled a target
weigh its risks. to reach “net zero” emissions by 2050, and while
Under the renegotiated deal between BP the details of how it aims to achieve this have yet
and Hilcorp, announced in April, the price tag to be clarified, the sale of upstream, midstream
remained unchanged but the structure and phas- and downstream assets appears to align with
ing of the outstanding amount was adjusted. this goal.™

P14 www. NEWSBASE .com Week 26 02•July•2020