BP Alaska to sell its entire Alaska operations to Hilcorp Alaska
BP Alaska announced Tuesday morning that it is selling its entire Alaska operations to Hilcorp Alaska.
The sale will include BP’s entire upstream and midstream business in the state, including BP Exploration (Alaska) Inc., that owns all of BP’s upstream oil and gas interests in Alaska, and BP Pipelines (Alaska) Inc.’s interest in the Trans Alaska Pipeline System (TAPS).
Under the terms of the agreement, Hilcorp will pay BP a total of $5.6 billion, comprising of $4 billion payable near-term and $1.6 billion through an earnout thereafter. This is subject to state and federal approval.
The transaction is expected to be completed in 2020.
The deal forms a significant part of BP’s plan to divest $10 billion of assets over 2019 and 2020.
Approximately 1,600 employees are currently associated with BP’s Alaska business and BP says it's committed to providing clarity about their future as soon as possible as part of the transition process with Hilcorp.
Gov. Dunleavy shared the following statement on the announcement.
“Today’s announcement – a passing of the torch within the Alaska oil and gas sector – is significant news for our state, the future of North slope energy production, and the Trans-Alaska Pipeline. While we are only just reading of this announcement, we look forward to learning more and seeing operational details,” said Governor Dunleavy. “We welcome Hilcorp to their next phase in Alaska operations and thank BP for their decades long commitment in bringing Alaska’s mineral wealth to market.
The president of Alaska Oil and Gas Association, a trade association, called the news "historic and bittersweet."
“Alaska is losing a giant – a ‘major’ company; yet welcoming an expanding presence by Hilcorp," said Kara Moriarty, president and CEO of AOGA, "For over 40 years BP has been key to Alaska’s economy and community by employing thousands of Alaskans, generating millions of barrels of production and generously donating to charities across Alaska.”
Moriarty said that there is a lot of uncertainty about what the decision means.
“We do not know the full details or implications of this news today, so we are very mindful of the uncertainty this is likely to cause in the short term for many Alaskan employees and contractors. I have confidence in both companies and their decisionmaking as we go through this transition," she said.
U.S. Senator Lisa Murkowski, R-Alaska, issued the following statement.
“We thank BP for its long-standing partnership on resource production in our state and for the many significant and lasting philanthropic contributions it has made in our communities,” Murkowski said. “I’m looking forward to learning more details and am encouraged that an enterprising company like Hilcorp sees so much opportunity in Alaska and is willing to make such significant investments in one of the most prolific and under-explored basins in the world. Hilcorp has a strong record of hiring Alaskans and I hope they will continue and strengthen our record of responsible production on the North Slope.”
Murkowski is Alaska’s senior Senator and Chairman of the Senate Energy and Natural Resources Committee.
BP began working in Alaska in 1959, drilling the confirmation well for the Prudhoe Bay oilfield in 1968 and in the mid-1970s, helped build the 800-mile Trans Alaska Pipeline. BP began producing oil from Prudhoe Bay in 1977. The giant oilfield – the most prolific in U.S. history – has to date produced over 13 billion barrels of oil and is estimated to have the potential to produce more than one billion further barrels.
To read the full announcement, click
“Our exit from Alaska does not in any way diminish BP’s commitment to America," Bob Dudley, BP group chief executive, said "We remain very bullish on the U.S. energy sector. In just the last three years we have invested more than $20 billion in the U.S. and we will continue to look at further investment opportunities here.”
Hilcorp is one of the largest, privately-held independent oil and natural gas exploration and production companies in the United States, according to the Anchorage Chamber of Commerce. They are headquartered in Houston, TX.