BP PLC agreed to sell its wholly owned BP Exploration Co. (Colombia) Ltd. (BPXC) for $1.9 billion to a consortium of Talisman Energy Inc. and Colombia's Ecopetrol SA. Subject to regulatory and other approvals, the sale is expected to be completed by yearend.
BP PLC Chief Executive Tony Hayward noted the Colombian holdings contributed "significantly" to BP's global production over the years. The sale price includes a working capital adjustment of $145 million.
The acquisition "fits into our strategic plan perfectly, bringing new reserves, production, and potential areas for our exploratory portfolio," said Ecopetrol Chief Executvie Javier Gutierrez. Ecopetrol will hold 51% of BPXC.
"These are tremendous assets that our team knows well," said Talisman Pres. and Chief Executive John A. Manzoni. Talisman will acquire a 49% interest in BPXC for $858 million, excluding its share of working capital.
The agreement does not affect BP's Castrol lubricants business and other downstream oil activities in Colombia. Ecopetrol and Talisman are to pay BP a cash deposit of $1.25 billion with the $675 million balance of payment due on completion of the sale.
BPXC holds BP's oil and gas exploration, production, and transportation interests in Colombia. Upon closure of the sale, Talisman will hold a 49% stake, while Ecopterol will hold 51%.
BPXC's assets
BPXC's assets include interests in five producing fields in four association contracts, four separate pipeline interests, and two offshore exploration blocks. Net proved reserves total 60 million boe and BPXC's net production is 25,000 boe/d.
Upstream, BPXC operates the Tauramena (31% interest), Rio Chitamena (31%), Recetor (50%), and Piedemonte (50%) association contracts, which are due to expire during 2016-20. BP said producing fields on the licenses include the Cusiana oil and gas field, and the Pauto and Florena fields.
BPXC holds a 40.56% interest in the RC4 and RC5 exploration blocks off Cartagena. The transaction includes BPXC's interests in the Cusiana gas processing facility and interests in four pipelines, totaling 1,600 km of crude and 400 km of gas pipelines, including a 24.8% interest in the OCENSA crude oil pipeline. Talisman will hold a 49% indirect interest.
In May, BPXC Pres. Alberto Galvis said the firm planned to invest more than $300 million in Colombia in 2010 and 2011 as it expands its gas and oil production in the country.
At an international oil and mining conference in Cartagena, he told reporters, "We're going to forge ahead with this investment" despite the Macondo blowout in the US Gulf of Mexico.
Last month, however, BP said it entered into several agreements to sell to Apache Corp. some upstream assets valued at $7 billion to raise cash for the gulf spill.
"Over the last 2 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," said BP Chairman Carl-Henric Svanberg. "The board believes that there are opportunities to divest assets [that] are strategically more valuable to other parties than they are to BP," he said (OGJ, Jul 22, 2010).
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