BP to sell US onshore assets to finance $10.5bn BHP deal

UK firm BP has reportedly launched the sale of its US oil and gas onshore assets to fund the $10.5bn acquisition of BHP’s assets in Texas and Louisiana.

The company is looking to raise more than $3bn from the proposed asset divestments, Reuters reported citing unnamed industry and banking sources.

The proceeds from the transaction will be used to partly fund the purchase of BHP’s onshore assets.

Completed in October, the acquisition of BHP assets is expected to give BP a significant position in the liquids-rich regions of the Permian and Eagle Ford basins in Texas, as well as the Haynesville natural gas basin in East Texas and Louisiana.

When the deal was signed in July, BP agreed to pay $5.25bn in cash from existing resources upon completion, with the $5.25bn balance to be paid through deferred payments over a period of six months.

At that time, BP revealed that it would divest certain assets in the upstream segment to raise around $5bn to $6bn to finance the deal.

The firm intends to focus on production from its acreage in the Permian and Eagle Ford basins.

According to the news agency, representatives of BP’s onshore business met the management teams of potential buyers in New York last week.

Two of the sources revealed that the New York meeting was preceded by a series of informal negotiations with private equity firms since last month to assess interest in the onshore assets being put up for sale by BP.

US-based investment companies Carlyle and Warburg Pincus are reportedly interested in acquiring the assets.

BP is offering seven packages, including fields in the San Juan basin, the Cotton Valley field in East Texas, the Arkoma and Anadarko basins in Oklahoma, and the Wamsutter basin in Wyoming.

The company’s asset base in the San Juan basin includes 9,000 operated and non-operated wells.

In a separate transaction, BP completed a swap deal with ConocoPhillips. Under the deal, BP acquired a ConocoPhillips subsidiary that owns a 16.5% stake in the Clair field in the UK North Sea, increasing its interest in the asset to 45.1%. The company sold its entire stakes in the Greater Kuparuk Area in Alaska, as well as the Kuparuk Transportation Company to ConocoPhillips.