BP sheds $1.9 billion in assets, selling Colombian oil business to consortium
Tuesday, August 3, 2010; 2:12 PM
BP peeled off another $1.9 billion of exploration and production assets Tuesday, selling its Colombian oil, gas and transportation business to a consortium made up of Colombia's national oil company and Calgary-based Talisman Energy.
The sale brings BP a little closer to its goal of selling up to $30 billion worth of assets in order to bolster its cash reserves to cover costs and liabilities linked to the massive oil spill in the Gulf of Mexico.
Fadel Gheit, an oil analyst with Oppenheimer & Co., called it a "good deal for BP" and said the company was "getting a high price on its barrels of reserves and production for a field that is in decline."
BP has agreed to sell a package of U.S., Canadian and Egyptian properties to Apache for $7 billion, and it said that it has informed the governments of Pakistan and Vietnam that it plans to sell its exploration and production assets in those countries. In addition, BP is trying to sell its share of a joint venture in Argentina.
BP chief executive Tony Hayward said in a statement that he was "delighted with the price" of the Colombian oil and gas assets. BP has interests in five producing fields, four pipelines and two offshore exploration blocks. Its share of proven reserves totals 60 million barrels of oil and gas, and its share of output amounts to 25,000 barrels a day of oil and gas. The producing fields peaked in 1999 and output has dropped by more than half since then, according to BP's Web site.
Pavel Molchanov, an oil analyst at Raymond James, also said the sale was "a great deal" for BP. He said that BP received a "rich multiple" for its assets, and that it "bodes well for the potential sale of the Argentinean assets, as well." Molchanov said that using Talisman's higher estimate of the proven reserves, and taking into account the value of the pipelines, the purchase price comes to a bit more than $20 a barrel. "As was the case with the Apache deal, this was clearly not fire-sale pricing," Molchanov said.
One irony of the deal is that John Manzoni, the chief executive of Talisman, was formerly one of BP's most senior executives. He was the company's top executive for refining and marketing from 2002 to 2007, a period that included the fatal explosion at BP's Texas City refinery.
Ecopetrol, the Colombian national oil company, will own 51 percent of the consortium acquiring BP assets, and Talisman will own 49 percent.