BP amends $5.6 billion sale of Alaska assets amid oil price collapse

BP said yesterday it had amended financial terms of the US$5.6 billion sale of its Alaska business to privately owned Hilcorp Energy following the collapse in oil prices due to the COVID-19 outbreak.

The original sale price will not be changed under the new terms, but they will provide for vendor financing, smaller payments in 2020 and for cash-flow sharing in the near term, the British oil giant said.

“BP remains committed to completing the sale, even in these volatile and difficult market conditions,” said BP’s Alaska president Janet Weiss in a statement.

The revised payment schedule is yet to be revealed by either party. The original agreement stipulated that Hilcorp would pay $4 billion this year and another $1.6 billion through an earnout over time.

“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,” said Hilcorp President Jason Rebrook.

The completion of the deal and transition of the assets into Hilcorp’s ownership should take place in mid-2020, although Hilcorp has still to receive approvals for the purchase of BP’s pipelines operations from the state pipeline regulator.

Oil prices took another plunge yesterday with Brent crude falling below $20 a barrel as investors fretted over the lack of available storage to handle a worldwide glut caused by the coronavirus-induced destruction of demand.