BP assets: Going once, going twice... Sold!
BP has agreed to sell its Pakistani exploration and production assets to British-based United Energy Group Limited (UEG) for $775 million. The transaction is expected to be completed in the first half of 2011. United Energy Group Plc is an independently listed energy company, according to its website.
BP had announced plans to sell its upstream assets in the country in July this year as part of a $30 billion global asset sale aimed at raising cash to pay for its Gulf of Mexico oil spill. Before the agreement to sell assets in Pakistan, it already had sales agreements in place totalling approximately $21 billion, said a statement released by the company on Tuesday.
Local assets consist of nine exploration and production blocks in Sindh and four offshore exploration blocks in the Arabian Sea. UBS analysts had estimated the value of these assets at $690 million in July, significantly lower than the $775 million value of the disposal.
Net production in BP Pakistan is currently about 35,000 barrels of oil equivalent per day, while gas production is roughly 200 million standard cubic feet a day.
The Oil and Gas Development Company Limited (OGDC) and Pakistan Petroleum Limited (PPL) had also submitted a joint bid for the company’s assets in the country. “The bid submitted by them was significantly lower than those submitted by other parties,” sources informed The Express Tribune on Monday.
Under the agreement, UEG is required to pay BP a cash deposit of $100 million with the balance of the proceeds due on completion of the sale. Completion of the transaction is subject to closing conditions, including the receipt of all necessary governmental and regulatory approvals.
BP Chief Executive Bob Dudley said the company was making speedy progress towards its goal. “We now have agreements to secure the majority of our selling target,” he said. “We are continuing to identify further assets that may be strategically more valuable to others than to BP as we complete the programme.”
Most recently, it raised $7 billion through the sale of its stake in Argentina-based Pan American Energy to China’s China National Offshore Oil Corporation (CNOOC).
Shares in BP gained 1.4 per cent to 464.55 pence at 11.02 am GMT on Tuesday, outperforming the European index of oil and gas companies which was up 0.2 per cent.
Published in The Express Tribune December 15th, 2010.
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