"BP today announced that it has agreed to sell its entire business in Alaska to Hilcorp Alaska, based in Anchorage, Alaska. Under the terms of the agreement, Hilcorp will purchase all of BP's interests in the state for a total consideration of $5.6 billion", the release said on Tuesday.
Under the terms of the agreement, Hilcorp will acquire BP's entire upstream and midstream business in the state, including BP's oil and gas interests, and BP Pipelines Inc's interests in the Trans Alaska Pipeline System, according to the press release.
Hilcorp is set to pay BP the total of $5.6 billion, with $4 billion payable near-term and an additional $1.6 billion thereafter. The sale is expected to be completed in 2020, pending federal regulatory approval.
“We are steadily reshaping BP and today we have other opportunities, both in the US and around the world, that are more closely aligned with our long-term strategy and more competitive for our investment”, BP Chief Executive Officer Bob Dudley said, cited by Bloomberg.
BP was one of the original partners in building the 800-mile (1,300-kilometer) Trans-Alaska Pipeline System in 1977, designed to bring oil from the North Slope to the port of Valdez on Alaska’s southern coast. It was one of the largest privately funded construction projects in history. BP holds a 49 percent stake in the pipeline, with ConocoPhillips, Exxon Mobil Corp. and Unocal Pipeline Co. holding the remainder, Bloomberg said.
Alaska’s annual production reportedly peaked at 2 million barrels a day in 1988, the year before the Exxon Valdez oil spill, according to Bloomberg. Last year, it reportedly averaged only 479,000 barrels a day.