Having just completed its merger with ARCO (see story, this page), BP Amoco PLC agreed to sell ARCO's Alaskan North Slope properties to Phillips Petroleum Co. for $7 billion after resolving ExxonMobil Corp.'s objections. ExxonMobil had sued to block the sale, claiming that it had right of first refusal under a 1964 agreement (OGJ, Apr. 3, 2000, p. 30).
Paving the way for the sale was a new agreement between BP Amoco, ExxonMobil, and Phillips realigning ownership and operation of the Prudhoe Bay and Point Thomson units.
The agreement will give BP Exploration (Alaska) Inc. about 26.7% of the Prudhoe Bay Unit, ExxonMobil 36.8%, and Phillips 36.5%. Three other firms have fractional interests, and the final equity percentages will be determined when they approve the deal.
BP, which operated the western side of Prudhoe Bay field while ARCO operated the eastern sector, now will be the sole operator. The companies said that would reduce costs and improve oil recovery. The field is expected to produce 564,000 b/d this year.
The companies said the deal provides a more even distribution of liquids production among the three major working-interest owners. ExxonMobil's and Phillips's liquids production each will increase about 30,000 b/d, and BP Exploration will get additional interest in the Prudhoe Bay Unit gas reserves and in Point Thomson gas-condensate field.
ExxonMobil and BP Exploration said ownership of the Point Thomson field area would be set at about 55% and 45%, respectively.
Phillips will become operator of the North Slope Kuparuk River and Alpine fields.
The sale to Phillips of all ARCO's Alaskan businesses included a 21.9% interest in Prudhoe Bay oil reserves and 42.6% of gas reserves, a 55% interest in the greater Kuparuk area, and a 78% stake in Alpine field. It also includes 1.1 million net exploration acres, a 22.3% interest in the Trans-Alaska Pipeline System, and six ARCO tankers in service and three under construction. Booked reserves involved in the transaction total 1.9 billion boe.