By OGJ editors
HOUSTON, Nov. 29 -- BP PLC agreed to sell its 60% interest in Pan American Energy (PAE) for $7 billion to its joint venture partner Bridas Corp., which already owns 40% of the Argentina-based exploration company.
PAE explores, develops, and produces oil and gas in the Southern Cone region of South America. Its main holdings are in Argentina, where it is the second-largest producer of oil and gas.
As of Dec. 31, 2009, proved reserves attributable to BP’s 60% interest in PAE were 917 million boe. BP’s net PAE production was 143,000 boe/d.
The transaction remains subject to necessary governmental and regulatory approvals as well as the requirement that there has been no material adverse effect on PAE and no material adverse effect on BP’s ability to complete the transaction.
Under the PAE agreement, Bridas is to pay BP a cash deposit of $3.53 billion in two payments this year with the balance of the proceeds due on completion of the sale.
If any closing conditions are not met, BP will be required to repay the deposit to Bridas.
The transaction excludes the shares of PAE E&P Bolivia Ltd.
In July, BP announced plans to divest up to $30 billion of assets by yearend 2011. Before the Nov. 28 PAE announcement, BP already had sales agreements in place worth $14 billion. BP said it will use proceeds of the PAE sale to increase the cash available to the group.
Bob Dudley, BP group chief executive, said the PEA agreement is part of the BP’s strategy to “meet our significant financial commitments arising from the Gulf of Mexico tragedy” in a reference to the Macondo well blowout and an explosion and fire on Transocean Ltd.’s Deepwater Horizon semisubmersible, killing 11 workers and resulting in a massive oil spill.
“We now have agreements in place that should secure the majority of our divestment target,” Dudley said.