BP announced today it would sell all of its Alaska assets, including its oil and gas interests on the North Slope and its interest in the trans-Alaska pipeline, to Anchorage-based Hilcorp Alaska for $5.6 billion.
The sale includes BP Exploration (Alaska), which owns all of BP's upstream oil and gas interests in the state, and BP Pipelines, which oversees its pipeline holdings, according to a news release.
BP has operated in Alaska since 1959 and owns 26% of the Prudhoe Bay oilfield. It has 1,600 employees in the state and supports another 8,000 jobs. Hilcorp has been operating in Alaska since 2012 and is the largest private oil and gas operator in the state. It specializes in operating mature oil and gas assets and has significant holdings in Cook Inlet and the North Slope.
“As a highly-capable operator with extensive Alaskan experience, Hilcorp is ideally-placed to take this important business on into the future, continuing to optimize its performance and maximize its value for the State of Alaska," Bob Dudley, BP group chief executive, said in the news release. "We are committed to a safe and smooth transition of operations so that our employees, partners and local, state and federal government officials all feel that we have handed over these important assets in the right way.”
The sale includes BP's interests in the Prudhoe Bay oilfield, Milne Point, Point Thomson, Liberty project and non-operating interests in exploration leases in the Arctic National Wildlife Refuge. Hilcorp is the operator in both the Milne Point and Liberty projects, which is acquired from BP in 2014.
In 2018, BP sold its interests in the Kuparuk field to ConocoPhillips.
“Today’s news is historic and bittersweet,” said Kara Moriarty, president and CEO of the Alaska Oil and Gas Association in a news release. “Alaska is losing a giant — a 'major company; yet welcoming an expanding presence by Hilcorp. 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.”
According to BP, the sale is part of a strategic $10 billion divestment program for the corporation, which has operations in nearly 80 countries, including significant holdings in the Lower 48.
In 2018, BP donated more than $4 million to education and community organizations across Alaska.
Hilcorp Alaska, an affiliate of Hilcorp Energy Company, is a privately held oil and natural gas exploration and production company. Hilcorp Alaska employs more than 500 full-time employees throughout the state. Hilcorp Energy Company is headquartered in Houston, Texas, and has more than 2,300 full-time employees.
Under the terms of the agreement, Hilcorp will pay BP a total of $5.6 billion, with $4 billion payable near-term and $1.6 billion through an earnout. With state and federal regulatory approval, the transaction is expected to be completed in 2020.
“We look forward to hearing more details about Hilcorp’s plans to prolong the life of these mature assets, including mighty Prudhoe Bay," Moriarty said in the release. "Alaska only has a handful of producing companies in the state, and after today we have one less company here — a company some claimed would never leave. It’s a recognition that the oil and gas industry is ever-changing, and nothing is guaranteed.”
Senate President Cathy Giessel, R-Anchorage said in a statement that she is excited to see Hilcorp expand in Alaska, but that the move raised questions.