BP, Hilcorp revise financial terms of Alaska business sale

Citing significant market volatility and oil price falls, BP and Hilcorp have renegotiated financial terms of the 2019 deal that would see BP sell its Alaska business to Hilcorp (OGJ Online, Sept. 2, 2019).

Subject to regulatory approvals, the deal is expected to close in June.

Originally, Hilcorp was set to pay BP $4 billion near-term and $1.6 billion through an earnout thereafter for total consideration of $5.6 billion. Hilcorp paid BP a $500 million deposit on signing of the transaction in 2019.

The revised agreement adjusts the structure and phasing of the remaining consideration to include lower completion payments in 2020, new cash flow sharing arrangements over the near-term, interest-bearing vendor financing and, potentially, an increase in the proportion of the consideration subject to earnout arrangements.

Detailed plans to transition operations to allow Hilcorp to focus on embedding planned operating efficiencies as rapidly as possible have been developed, BP said in a statement.

In Alaska, BP operates Prudhoe Bay, with a working interest of 26%, and holds non-operating interests in producing Milne Point and Point Thomson fields. It also holds non-operating interests in the Liberty project and exploration lease interests in the Arctic National Wildlife Refuge. In addition to shares in TAPS and its operator the Alyeska Pipeline Service Co., BP is divesting its midstream interests in the Milne Point Pipeline and the Point Thomson Pipeline.

The deal is part of BP’s divestment program to deliver $15 billion of announced divestments by mid-2021. Additional information about the deal will be included in BP’s first quarter 2020 results scheduled for release on Apr. 28, the company said.