BP near $7 bn Gulf of Mexico assets sale to Plains Exploration

British oil giant BP is close to finalising a deal to sell some of its offshore oil fields in the Gulf of Mexico to US-based independent oil explorer and producer Plains Exploration & Production Co. for around $7 billion, The Wall Street Journal yesterday reported, citing people familiar with the matter.

The London-based company had earlier said that it plans to sell assets worth around $38 billion by the end of next year in order to pay damages for the oil spill from the explosion of its Macondo well in the Gulf of Mexico, the worst offshore spill in the US history.

After selling some of its non-core assets last year in order to meet the estimated $40 billion cost in cleanup and lawsuits, BP said in May this year that it would sell some mature but non-strategic assets in the Gulf, including its interests in the Marlin, Horn Mountain, Holstein, Ram Powell, and Diana Hoover fields.

BP has so far sold assets worth around $26.5 billion, including plans to sell its 50 per cent stake in Russian joint venture TNK-BP, an asset that contributed $3.7 billion to its coffers last year. (See: BP considers stake sale in Russian joint venture TNK-BP)

With a market capitalisation of $5.2 billion, Houston-based Plains Exploration, a 2002 spinoff from Plains Resources Inc, has oil and natural gas assets in California, Texas, Louisiana, the Rocky Mountains and the Gulf of Mexico.

The Wall Street Journal said that a deal could be announced as early as this week, although several other bidders have shown interest and another buyer could still emerge.

If concluded, Plains Exploration is expected to take on debt to fund the deal.