BP is in talks with Apache Corporation headquartered  in Houston, on a deal worth as much as US$10 billion that could include stakes in BP’s vast Alaska operations, according to people close to the matter, reported Zawya Dow Jones.
BP and Apache have both declined to comment on the matter.
These people say BP could announce the deal with Apache, or other asset sales, on July 27 – the same day it unveils its second quarter earnings.
The Apache deal is one of a number of broad capital-raising options the UK oil major is exploring to raise cash as it struggles to clean up the spill on the Gulf coast. People familiar with the matter say that with its asset sales, BP is moving along two tracks: It is in talks with a number of companies regarding a wide spectrum of assets and is also in “material” discussions with a single company – Apache – on a package deal worth $10 billion.
The Apache talks were first reported in London by the Sunday Times on Tuesday.
BP has already suspended its dividend and trimmed capital spending.
The talks come amid BP’s efforts over the weekend to cap the gushing Macondo well and replace it with a much tighter cap that should collect all the leaking oil and gas.
As of a week ago, BP said it had made 47,000 payments on compensation claims totalling almost $147 million. But it is expected to face much larger claims for damages, as well as potential criminal and civil penalties.
Despite the mounting cost of the spill, BP’s share price has risen about 20% over the last two weeks, in part due to progress on the relief well and expectations that Middle Eastern sovereign wealth funds might buy into the stock to prop up the oil major and help preserve its independence. After hitting a 14-year low of 302.9 pence ($4.59) on June 29, BP shares closed Friday in London at 364.8 pence.
BP opened its first office in Alaska in 1959 and has a 26% stake in the Prudhoe Bay oil field — which after 33 years of production remains the largest in North America. It operates 14 other oil fields on the North Slope, and has minority interests in six others. It also operates four pipelines there and has a big stake in the 800-mile Trans Alaska Pipeline System, which brings oil from Prudhoe Bay in the north to the port of Valdez.
But its Alaskan assets are mature, and output there has been gradually declining. Last year, BP’s net production in Alaska was 181,000bpd of oil and gas, down from 197,000bpd in 2008.
In recent years as its output has fallen, BP has also been plagued by operational problems in Alaska. In 2006, a pipeline leak led to a 200,000 barrel oil spill — the worst on the North Slope in Alaska’s history. Under a criminal settlement the following year, BP pleaded guilty to a violation of the federal Clean Water Act and paid $20 million in fines and restitution. The company has suffered a number of other spills and pipeline ruptures in Alaska since then.
BP has a history of big deals with Apache. In 2003 it sold its Forties field in the North Sea along with a package of shallow-water assets in the Gulf of Mexico for $1.3bn to the US independent oil exploration and production company.
Apache has a reputation for snapping up the majors’ mature assets and applying cutting-edge technology to squeeze more oil out of them – a strategy it has successfully applied in the North Sea and the Gulf of Mexico.
