Providing coverage of Alaska and northern Canada's oil and gas industry
July 2018

Vol. 23, No.27 Week of July 08, 2018

Swap involves Slope

ConocoPhillips gets BP’s 39.2% of Kuparuk in exchange for share in UK field

Kristen Nelson

Petroleum News

ConocoPhillips and BP said July 3 that ConocoPhillips is acquiring BP’s 39.2 percent interest in the Greater Kuparuk area, and BP’s 38 percent interest in the Kuparuk Transportation Co. for an undisclosed price and is selling BP a subsidiary with a 16.5 percent interest in the Clair field in the United Kingdom. The Clair field sale is subject to regulatory approval; the Greater Kuparuk area acquisition is subject to co-owner pre-emption rights and both Kuparuk acquisitions are subject to regulatory approval.

ConocoPhillips said the transactions are inter-conditional and expected to close simultaneously. Excluding customary adjustments, the transaction prices are expected to be cash neutral to both companies. The effective date will be July 1.

“These transactions are significant for ConocoPhillips because they continue our strategy of coring up our legacy asset base in Alaska, while retaining an interest in the Clair Field in the U.K.,” said ConocoPhillips Chairman and CEO Ryan Lance. “We have a long history of creating value in Alaska and an ongoing commitment to invest in our legacy assets, as well as in the development of our recent exploration success. Likewise, we are committed to maximizing the value of our assets in the U.K. North Sea, including continued investment in our operated assets in the Central North Sea,” Lance said.

ConocoPhillips is already the majority working interest owner at Kuparuk, where it is the operator, at 55.3 percent, followed by BP at 39.2 percent, Chevron at 4.9 percent and ExxonMobil at 0.6 percent, giving ConocoPhillips 94.5 percent at Kuparuk once this deal closes.

BP focus at Prudhoe

BP retains its 26.4 percent interest at Prudhoe Bay which it operates.

“This is a further step in focusing our portfolio around core assets and developments which have the potential for significant growth,” said BP Upstream Chief Executive Bernard Looney. “Clair is a key advantaged oilfield for our North Sea business, a giant resource whose second phase is about to begin production and which holds great potential for future developments.”

Current Clair partners are BP, operator, 28.6 percent; ConocoPhillips, 24 percent; Shell UK Ltd., 28 percent; and Chevron North Sea Ltd. 19.4 percent.

As a result of this agreement, BP will hold a 45.1 percent interest in Clair and ConocoPhillips will retain a 7.5 percent interest.

“In Alaska, this transaction will increase our focus on managing our deep resource base at the massive Prudhoe Bay oilfield and help enable a more competitive and sustainable business for BP,” Looney said.

The interests BP is selling in Alaska are non-operating, while the Clair field, the company said, is a core asset of its North Sea business in the U.K.

Interests in the west side

ConocoPhillips has a strong position on the western North Slope and has been steadily moving west.

In partnership with Anadarko Petroleum ConocoPhillips developed the Alpine field in the Colville River unit west of Kuparuk and farther west is in the process of developing Greater Mooses Tooth in the National Petroleum Reserve-Alaska, where it has also announced a large discovery at Willow.

The company recently closed on its acquisition of Anadarko’s 22 percent interests in western North Slope properties, including Anadarko’s non-operated interest in the western North Slope and its interest in the Alpine pipeline for $400 million; that transaction had an effective date of Oct. 1, 2017.

The acquisition of BP’s Kuparuk interests, including BP’s ownership position in the Kuparuk Pipeline, which moves oil to the trans-Alaska oil pipeline, solidifies ConocoPhillips’s position on the western North Slope.

Substantial amounts of North Slope crude oil are involved.

The most recent production data by field, from May, shows 66,390 barrels per day from the Colville River unit, some 13 percent of Slope production, and 113,057 bpd at Kuparuk, 22 percent of Slope production. ConocoPhillips also holds a 36 percent working interest ownership at the BP-operated Prudhoe Bay field, the Slope’s largest, where May production averaged 259,387 bpd, 50 percent of Slope production.

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