BP PLC is moving quickly to secure the money it needs to pay for the spill in the Gulf of Mexico.
Just weeks after promising to raise US$10 billion by selling assets, the British oil company said on Tuesday it will sell properties in the US, Canada and Egypt to Apache Corp for US$7 billion.
At least part of the proceeds will go toward a US$20 billion fund that BP agreed to last month under pressure from US President Barack Obama’s administration. The fund will help pay cleanup costs and damages from the spill.
The Apache deal follows other actions BP has taken to bolster its cash reserves to pay costs that analysts have said could rise to US$100 billion. It reduced capital spending by about US$2 billion and suspended dividend payments of about US$10.6 billion for this year.
Apache has made a number of deals this year, but it wasn’t expecting to do this one.
“If it hadn’t been for the Gulf incident, I’m sure we wouldn’t be sitting here tonight,” Apache chief executive G. Steven Farris told investors after announcing the deal.
BP has spent about US$4 billion so far on containing and cleaning up the oil, as well as on damage claims from Gulf businesses and residents. However, that’s just the beginning. The Gulf spill could be one of the worst environmental disasters in US history and the rig explosion killed 11 workers. Analysts expect BP to be paying fines, damages, legal costs and other expenses for years.
BP has asked its partners in the blown-out well — Anadarko Petroleum Corp and MOEX 2007 LLC — to contribute their share of the cleanup costs, but both companies so far have refused.
As part of its agreement with the Obama administration, BP will contribute US$5 billion to the oil spill fund this year. The deal with Apache, which includes a US$5 billion deposit due on Friday next week, will help cover that contribution.
Earlier on Tuesday, BP announced plans to sell its oil and gas fields in Vietnam and Pakistan that analysts value at between US$2 billion and US$4 billion.
“BP’s board believes that there are opportunities to divest assets which are strategically more valuable to other parties than they are to BP,” BP chairman Carl-Henric Svanberg said in a statement.
The asset sales to Apache include: Oil fields and gas processing plants in Texas and southeast New Mexico worth US$3.1 billion; BP’s upstream Western Canadian gas business for US$3.25 billion; oil exploration and production assets in Egypt worth about US$650 million.
BP earned US$166 million last year from those properties.
They’re considered to be past their peak, but that spells opportunity for Apache, which has a reputation for buying mature fields and boosting their production, Argus Research analyst Phil Weiss said.
After the deal was announced, BP shares rose almost 3 percent in after-hours trading while Apache shares dropped about 3 percent.
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