BP has sold its upstream business in Alaska to Houston-based Hilcorp, putting the British oil major one step closer to exiting the northernmost U.S. state after six decades.
The sale, which closed Wednesday, includes all of the company’s upstream oil and gas interests in Alaska’s Prudhoe Bay oil field. BP is still working with regulators to complete the sale of its interest in the Trans Alaska Pipeline System to Hilcorp, but the upstream asset sale makes up the vast majority of the $5.6 billion deal, first announced in August.
“(Prudhoe Bay) is a world-class field and Hilcorp is well-positioned to take it into the future and maximize value for the State of Alaska,” William Lin, a BP executive vice president, said in a statement. “We wish them the very best for this next phase of Prudhoe Bay’s long life.”
ALASKA DEAL: Hilcorp to buy BP’s Alaska assets for $5.6B
The $5.6 billion deal survived the coronavirus-driven oil crash, which slowed acquisition activity as energy companies were forced to write down the value of oil and gas assets amid low oil pries. After oil prices plunged this spring, French major Total backed out of a deal with Houston-based Occidental Petroleum to acquire former Anadarko assets in Ghana. BP said it adjusted the financial terms of the agreement to reflect the depressed oil market, but managed to retain the overall $5.6 billion deal.
With the deal, Hilcorp will double its oil and gas production in Alaska, becoming one of the largest producers in the state along with ConocoPhillips of Houston and Exxon Mobil of Irving. The sale represents a kind of “changing of the guard,” as several major energy companies, such as BP, are selling stakes in the mature Alaskan oil region to focus on U.S. shale and deepwater projects worldwide.