BP Plc (LON:BP) announced earlier this week that it had agreed to sell its entire business in Alaska to Hilcorp for $5.6 billion. This effectively means that the FTSE 100 oil giant is ending its 60-year presence in the US state.
The deal will include BP’s entire upstream and midstream business in the state, including BP Exploration (Alaska) Inc., that owns all of BP’s upstream oil and gas interests in Alaska, and BP Pipelines (Alaska) Inc.’s interest in the Trans Alaska Pipeline System (TAPS). The British oil major is also selling its operating stake in Prudhoe Bay, which is the largest oil producing field in US history.
The move reflects a shift in BP’s strategy for the US, which now involves a sharpened focus on projects that still have growth potential and can boost the company’s production. As part of this strategy, BP last year spent $10 billion to acquire US shale operations from mining giant BHP Group (LON:BHP). The company has announced plans to cover these expenses though divestments over the next two years.
“Alaska has been instrumental in BP’s growth and success for well over half a century and our work there has helped shape the careers of many throughout the company,” BP’s chief executive officer Bob Dudley said in a statement on Tuesday. “However, we are steadily reshaping BP and today we have other opportunities, both in the US and around the world, that are more closely aligned with our long-term strategy and more competitive for our investment. This transaction also underpins our two-year $10 billion divestment programme, further strengthening our balance sheet and enabling us to pursue new advantaged opportunities for BP’s portfolio within our disciplined financial framework,” he added.
BP’s shares have been mostly on the rise since the Tuesday announcement. In today’s trading, the BP share price stood at 502.70 GBX, as of 12:22 BST. The shares have gained 0.8% since the start of today’s session.