BP to sell oil and natural gas fields to rival Apache for $7 billion

LOS ANGELES — Beleaguered petroleum giant BP agreed Tuesday to sell oil and natural gas fields in the United States and other countries to rival Apache Corp. for $7 billion, in its biggest move yet to raise money to pay reparations for the Gulf of Mexico oil disaster.

The company announced plans to sell its Permian Basin fields in Texas and New Mexico — acquired as part of the purchase of Los Angeles-based Arco in 2000 — as well as additional properties in Canada and Egypt. Apache was said to be interested in BP’s Alaskan assets, but they weren’t part of Tuesday’s deal.

BP pledged last month to set up a $20 billion
fund to pay claims for disaster victims. It planned to finance the fund
by suspending its dividend for the rest of the year, cutting back
capital spending and selling up to $10 billion worth of assets. Other asset sales are expected.

“This is a good deal for BP because it frees up more cash if they need it,” said Phil Flynn, energy analyst for PFGBest Research.

The announcement comes days after BP placed a cap over the errant well, which had been spewing oil since the deadly April 20 explosion of the Deepwater Horizon drilling rig in the Gulf of Mexico.
Eleven people were killed in the accident, and the subsequent oil spill
has become the worst in U.S. history, fouling beaches in five states.

Carl-Henric Svanberg, BP’s chairman, said in a statement that the fields weren’t central to BP’s post-spill plans.

“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,” Svanberg said. “The board believes that there are opportunities
to divest assets which are strategically more valuable to other parties
than they are to BP.”

Houston-based
Apache, which already operates near the BP properties, is known for its
ability to extract oil from older fields that have been in operation
for many years.

“I think (Apache) looked at this as a once-in-a-lifetime opportunity that they just couldn’t pass up,” Flynn said.

———

(c) 2010, Los Angeles Times.

Visit the Los Angeles Times on the Internet at http://www.latimes.com/

Distributed by McClatchy-Tribune Information Services.