British Petroleum plc plans to sell its interest in Canadian subsidiary BP Canada, in the process withdrawing from North American onshore upstream operations except for Alaska's North Slope.
The transaction will be lead-managed by RBC Dominion Securities, which is arranging the sale of the shares to investors at a price of $13 (Canadian)/share to be paid in three installments during the next 24 months. BP expects the sale to raise $374 million (Canadian).
The company's total market capitalization at the current market price is $688 million (Canadian). BP's wholly owned BP Canadian Holdings holds 28.7 million shares, or 56.94% of issued shares.
BP Canada's gross proved reserves, before royalty at the end of 1991 amounted to 40 million bbl of oil and condensate and 743 bcf of gas. The company produced 16,000 b/d of conventional oil and natural gas liquids and 170 MMcfd of gas in 1991.
John Browne, chief executive of BP Exploration, said, "We face a wealth of opportunities in our key producing areas: the North Sea and Alaska. We also have two major discoveries, in Colombia and the deepwater of the Gulf of Mexico, to be developed in the next few years. Accordingly, we have to make choices on a worldwide basis about the allocation of resources we have available.
"As part of the process of focusing our activity we have decided, aside from Alaska and the Gulf of Mexico, to withdraw from the onshore oil and gas business in North America.
"The sale of BP Canada, following disposal of TEX/CON last year and sale of our interest in the Canadian Hunter joint venture earlier this year, completes the implementation of that decision. In each case those are good businesses but not activities that fit BP's strategy.
"We believe BP Canada's considerable potential, including particularly the gas discoveries in the Monkman area, can be better developed by those for whom the assets are central and strategic."
BP Canada last month said the Monkman area of Northeast British Columbia is developing into a world class gas exploration play (OGJ, Apr. 20, p. 118).
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