Economy

BP To Sell $7 Bln In Oil, Gas Assets To Apache

One major reason it was unlikely the Gulf of Mexico oil disaster would drive BP into bankruptcy court, experts have said, is that the company is exceedingly rich in assets, namely oil and gas leases in the U.S. and elsewhere.

It could just sell some of them to help pay for the cleanup and to settle claims against it. The company has to raise money to fund the initial $20 billion fund it has set up to pay claims, for instance.

And that's exactly what the energy giant is starting to do. BP said Tuesday it agreed to sell $7 billion in oil and gas assets to Apache Corp. The assets are in Texas, New Mexico, Canada and Egypt.

An excerpt from a BP news release:

The deals, together worth a total of $7 billion, comprise BP’s Permian Basin assets in Texas and south-east New Mexico, US; its Western Canadian upstream gas assets; and the Western Desert business concessions and East Badr El-din exploration concession in Egypt.

The decision to make these divestments follows the announcement made by BP last month that it was increasing its target for divestments to $10 billion. The proceeds of the sales will be used by BP to increase the cash available to the group.

BP Chairman, Carl-Henric Svanberg, said: “Over the last two months the Board has considered BP’s options for generating the cash necessary to meet the obligations likely to arise from the Gulf of Mexico oil spill. BP has an extremely strong asset base which is diversified geographically as well as by asset class. The Board believes that there are opportunities to divest assets which are strategically more valuable to other parties than they are to BP. Today’s announcement is the first such transaction and meets the value and strategic criteria of both parties.”

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