BP confirms sale to Hilcorp; upstream may close first
Yesterday BP confirmed that it plans to go ahead with the sale of its Alaska assets to Hilcorp and said in a statement that while the total sale consideration remains at the $5.6 billion announced in August, financial terms have been adjusted to reflect the market.
BP said it continues to expect sale completion in mid-2020, following renegotiation of financial terms "to respond to the current environment."
But the sale may occur in two phases - upstream first and then midstream.
A statement from Janet Weiss, BP Alaska president, said: "If necessary due to timing of approvals, we will complete part of the deal in June, transferring the upstream business to Hilcorp, while continuing to work with regulators for approval of the sale of the midstream."
The transfer of midstream assets is before the Regulatory Commission of Alaska, which has set a Sept. 28 date to reach a decision.
BP said total consideration for the sale, $5.6 billion, remains unchanged, subject to customary closing adjustments, but "the structure of the consideration and phasing of payments has been modified."
"We have worked closely with Hilcorp to reconfirm our commitment to completing this deal," BP Chief Operating Officer William Lin said in BP's statement.
BP said the original agreement provided for Hilcorp to pay $4 billion in the near term and $1.6 billion "through an earnout thereafter." Hilcorp has paid a $500 million deposit.
BP said there has been modification of the structure and phasing of payments "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."
Jason Rebrook, president of Hilcorp Energy Co., said in a statement that the company is excited about its future in Alaska and looks "forward to continuing to safely develop Alaska's natural resources. In the weeks ahead, we will continue to work with BP, the State of Alaska, and others to ensure a seamless transition process as we complete this transaction."
- KRISTEN NELSON
88 Energy makes offer on XCD Energy
Alaska-focused oil explorers 88 Energy and XCD Energy are looking at merging their North Slope assets.
According to April 27 press releases from both publicly traded Australia-based companies, XCD received a non-binding takeover offer late Friday afternoon to acquire all of the fully paid ordinary shares and listed options on issue in XCD Energy, with discussions between the two ASX-listed firms continuing through the weekend.
The unsolicited non-cash offer for 100% of XCD's shares involved each XCD shareholder receiving 1.67 shares in 88 Energy for every 1 XCD share held and 0.5 of an 88 Energy share for every 1 XCD quoted option held.
XCD is owner of North Slope Project Peregrine, a Nanushuk play within an area of 195,373 acres made up of 17 leases within the National Petroleum Reserve-Alaska.
88 Energy's key North Slope project areas are Project Icewine and its Yukon Gold leases, encompassing a total of almost 480,000 acres.
XCD said the offer is subject to a 90% minimum acceptance condition from its shareholders.
One of the major shareholders in XCD is 88 Energy managing director David Wall, who was quoted in 88 Energy's press release as saying the strategic merit for the combination of the two companies assets is clear: "In a combined company, XCD Energy shareholders and listed option holders will be able to leverage from 88 Energy's geological and operational expertise, specific to the North Slope of Alaska, where we have drilled four wells as operator and acquired several 2D and 3D seismic surveys over the last five years. This includes extensive technical knowledge of the regionally successful Brookian oil plays, in which 88 Energy retains significant upside exposure via its highly prospective portfolio of exploration/appraisal projects covering ~250,000 net acres (480,000 gross) co-located on the North Slope."
- KAY CASHMAN
See full stories in May 3 issue, available online Friday, May 1 at www.PetroleumNews.com
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