Apache initiates arbitration proceedings over BP purchase
BP PLC reported that Houston independent Apache Corp. has initiated arbitration proceedings over a price dispute concerning Canadian assets it bought from BP Canada last year as part of a $7 billion transaction.
OGJ Oil Diplomacy Editor
LOS ANGELES, Mar. 4 -- BP PLC reported that Houston independent Apache Corp. has initiated arbitration proceedings over a price dispute concerning Canadian assets it bought from BP Canada last year as part of a $7 billion transaction.
“Apache alleges that in the future various of the sites that it acquired from BP Canada Energy pursuant to the parties’ July 2010 purchase and sale agreement will have to have work carried out to bring the sites into compliance with applicable Alberta environmental laws,” BP said.
“Apache Canada Ltd. claims that the purchase price should be adjusted for its estimated possible costs,” said BP Canada Energy, which denied that “such costs will arise or require any adjustment to the purchase price.”
BP said the process of selecting the arbitrator has begun, and that no hearing dates have been set.
Apache Canada confirmed in a filing with the US Securities and Exchange Commission on Feb. 28 that it has “asserted a claim against BP Canada arising out of the acquisition of certain Canadian properties under the parties’ partnership interest and share purchase and sale agreement dated July 20, 2010.”
In the filing, Apache said, “The dispute centers on Apache Canada Ltd.’s identification of alleged adverse conditions, as that term is defined in the parties’ agreement, and more specifically the contention that liabilities associated with such conditions were retained by BP Canada as seller.”
Apache Canada added that it “is diligently pursuing this claim.”
Last July, BP said $3.25 billion was the price payable by Apache for the western Canadian gas assets, including assets in the following operating areas: Noel, Ojay, Chinchaga, Wapiti, Fox Creek, Edson, Marten Hills, South West, and St. Lina. Also included is the proposed Mist Mountain coalbed methane project (OGJ Online, July 26, 2010).
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