BP is in talks to sell assets, including stakes in its Alaska oil fields, to Apache for $10 billion to $12 billion, a person briefed on the matter said on Sunday.
Should a deal be reached — one is not expected immediately — it would help provide BP with additional money to pay for cleaning up the immense oil spill in the Gulf of Mexico. Talks are continuing and may not result in a transaction, this person cautioned.
As it struggles to finally plug the gushing well in the gulf, including by installing a new containment cap, BP has been taking steps to pay for the cleanup costs. Last month, the company pledged to President Obama that it would set aside $20 billion in an escrow fund to handle claims, although some analysts have estimated that BP’s total liability may rise to $70 billion.
Among the assets that may be sold is BP’s 26 percent stake in the Prudhoe Bay field in Alaska’s North Slope, the largest oil field in North America.
In 2006, a spill at Prudhoe Bay leaked more than 200,000 gallons into Alaskan waters, costing BP about $20 million in fines and restitution. Still, the vast fields are considered a crown jewel for the company.
Chief among BP’s goals right now is to assure investors that it remains financially sound. The company’s chief executive, Tony Hayward, has been traveling around the world to bolster support from major stakeholders.
BP has already said that it will sell about $10 billion worth of assets as part of its financing strategy. It has already suspended its dividend to help conserve about $8 billion in cash, and plans to cut capital spending by several billion dollars. The company has been lining up financing from a group of banks as well, though it has also said it does not plan to issue new equity to potential new investors.
BP’s talks with Apache were first reported by The Sunday Times of London.
A deal with Apache, an independent oil and gas company known for its numerous acquisitions, would go a long way toward securing the money BP has pledged to put toward the cleanup costs. The two companies have struck deals together in the past, including BP’s sale of 18 Gulf of Mexico oil fields to Apache in 2006.
The company is also considering asset sales elsewhere in the world, including Vietnam and Algeria, according to another person briefed on the matter.
The Justice Department has already taken the unusual step of asking BP for advance notice of major asset sales or cash transfers.
Apache, based in Houston, has exploration and production interests in the Gulf of Mexico, the Gulf Coast states and east Texas, as well as in countries including Egypt and Canada.
The company has often turned to deal-making to expand its assets, announcing four transactions this year. But should this round of talks with BP succeed, it would lead to the biggest deal in Apache’s history, according to data from Capital IQ, a data service provider. Apache had a market value of nearly $30 billion as of Friday.
In April, Apache announced two gulf-related deals: a $2.7 billion takeover of Mariner Energy, an offshore exploration and production company, and a $1.05 billion purchase of Devon Energy’s gulf assets.
Representatives for Apache and BP could not be immediately reached for comment on the report of the talks.
Shares in BP have fallen nearly 7 percent over the last month on the London Stock Exchange, closing Friday at 364.8 pence each. BP’s American depositary receipts have fared better, rising nearly 1 percent over the same time period and closing on Friday at $34.05.
