British Petroleum amends its £4.5 billion Alaska agreement following a crash in oil prices

British Petroleum (LON: BP) announced a few changes in the financial terms of its Alaska deal on Monday. The oil major is seeking to sell its Alaska business to Hilcorp Energy for £4.5 billion. BP cited the recent crash in global oil prices for the changes that may result in a weaker cash boost than originally expected.

BP signed the deal with Hilcorp in August 2019

The revised deal, as per BP, doesn’t change the total consideration. The remaining payment, however, will be adjusted in terms of its structure and phasing. It will now include smaller payments this year and an arrangement for cash flow sharing in the near-term.

British Petroleum was reported 1% up in early trading on Monday.

As per the original deal, Hilcorp Energy had pledged £3.22 billion payment in the near-term while the remaining £1.29 billion was to be paid later through the earnout. In August 2019, the energy company signed the deal with a deposit of £402 million.

BP also expressed confidence on Monday that the transaction will be completed by the end of the first half of 2020.

U.S crude oil futures dropped below $0 last week

The Coronavirus pandemic brought crude demand to a halt that pushed the U.S crude oil futures below $0 for the 1^st time since record-keeping last week.

BP’s Alaska deal with Hilcorp also includes the Trans Alaska pipeline that spreads over 800 miles and the Prudhoe Bay oilfield that is the historically most prolific in the United States. Following the completion of the deal that was signed last year, BP will quit the region in which it has been operational for the past 6 decades. The sale, as per the UK oil and gas company, contributes significantly to its divestment program.

Hilcorp Energy is a company privately held by American billionaire businessman Jeffery Hildebrand. The company primarily operates in the far north region of the U.S but has increasingly been focusing on expansion in recent years.

At 311 GBX per share, British Petroleum is currently around 35% down year to date in the stock market. The stock had dropped to as low as 234 GBX per share in mid-March. Its performance in 2019 was also reported downbeat with an annual loss of roughly 6%.

At the time of writing, BP has a market cap of £62.90 billion and a price to earnings ratio of 19.50.