BP is to sell its 60% interest in Pan American Energy (PAE), an Argentina based oil and gas exploration, development and production company.
Bridas Corporation, an independent Argentine oil and gas holding company which owns the balance 40% interest in PAE will pay BP a cash total of US$7.06 billion for its 60% share. The transaction is expected to be completed in 2011.
The sale of its interests in PAE is part of BP’s plan, announced in July 2010, to divest up to $30 billion of assets by the end of 2011. Before the agreement to sell its interests in PAE, BP already had sales agreements in place totalling some $14 billion.
The proceeds of the sale will be used by BP to increase the cash available to the group and to aid it in dealing with the aftermath of oil spill in the Gulf of Mexico.
BP group chief executive Bob Dudley said: “Today’s agreement further demonstrates both the high quality and attractiveness of the assets throughout BP’s global portfolio and also the company’s ability to meet our significant financial commitments arising from the Gulf of Mexico tragedy.
“We now have agreements in place that should secure the majority of our divestment target. We will continue to identify further assets that may be strategically more valuable to others than to BP as we complete the programme.”
Under the terms of the agreement, Bridas Corporation is required to pay BP a cash deposit of $3.53 billion with the balance of the proceeds due on completion of the sale, $1.41 billion of this deposit is due to be paid on December 3, 2010, with the balance of $2.12 billion to be paid by Bridas Corporation on December 28, 2010.
PAE’s main interests are in Argentina, where it is the second largest producer of oil and gas. It holds blocks in four hydrocarbon basins in Argentina including Golfo San Jorge – including the large Cerro Dragon block – Austral, Neuquen and Northwest. The company also has interests in various portions of the oil and gas value chain, including oil and gas transportation, oil storage and loading, gas distribution and power generation.
As of 31 December, 2009, proved reserves attributable to BP’s 60% interest in PAE were 917 million barrels of oil equivalent. Net production associated with BP’s 60% interest in PAE is approximately 143 thousand barrels of oil equivalent per day.
