JUNEAU, Alaska BP said it has renegotiated financial terms with Hilcorp for the sale of its business assets in Alaska, a move BP said reflects the current low oil-price environment.
BP in August announced the proposed $5.6 billion sale of assets and operations in Alaska, including interests in Prudhoe Bay, the Point Thomson gas field and the trans-Alaska pipeline system. In a release late Sunday, BP said the sale consideration remains $5.6 billion but changes were made to the agreement’s structure.
The revised agreement was “structured with flexibility to phase and manage payments to accommodate current and potential future volatility in oil prices,” according to a release from BP.
BP Alaska President Janet Weiss in a statement called these challenging times. North Slope oil prices have been below $30 a barrel since mid-March and were closer to $10 a barrel last week.
Alyeska Pipeline Service Co., which operates the trans-Alaska pipeline, said Friday it asked North Slope producers to deliver 90% of what they had been delivering. Michelle Egan, an Alyeska spokeswoman, called it a planned, managed approach to address anticipated high inventory.
Weiss said BP will continue working with regulators to answer their questions and show BP is committed to completing the sale.
Jason Rebrook, president of Hilcorp Energy Co., in a statement Monday said Hilcorp is proud of the work it’s done in Alaska and plans to be “an important part of the Alaska economy and community for many years to come.”
Larry Persily, a former federal coordinator for Alaska natural gas projects, said he wasn’t surprised by news of the renegotiated terms. BP has been ready to move on, he said.
“Hilcorp was the best prospect, maybe the only serious, legit prospect,” Persily said. “Hilcorp wanted it so it was just a matter of coming to new terms.”
BP said the proposed sale is part of the company’s plan to divest $15 billion in assets by the middle of 2021. The company said that, subject to regulatory approvals, the parties expect the deal to close in June.
Weiss said if necessary due to the timing of approvals, the deal could be completed in parts, starting in June.