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BP sells Alaska business to Hilcorp for $5.6 billion

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Energy major BP has agreed to sell its entire Alaskan business to Hilcorp Alaska for a total consideration of $5.6 billion (€5.07 billion).

The sale includes BP’s entire upstream and midstream business in Alaska, including BP Exploration (Alaska), which owns all of the energy major’s upstream oil and gas interests in the state, as well as the BP Pipelines (Alaska) interest in the Trans Alaska Pipeline Systems (TAPS).

"Alaska has been instrumental in BP's growth and success for well over half a century and our work there has helped shape the careers of many throughout the company,” commented Bob Dudley, CEO of BP. “We are extraordinarily proud of the world-class business we have built, working alongside our partners and the State of Alaska, and the significant contributions it has made to Alaska's economy and America's energy security.

"However, we are steadily reshaping BP and today we have other opportunities, both in the US and around the world, that are more closely aligned with our long-term strategy and more competitive for our investment. This transaction also underpins our two-year $10 billion [€9 billion] divestment programme, further strengthening our balance sheet and enabling us to pursue new advantaged opportunities for BP's portfolio within our disciplined financial framework.

"As a highly-capable operator with extensive Alaskan experience, Hilcorp is ideally-placed to take this important business on into the future, continuing to optimise its performance and maximise its value for the State of Alaska. We are committed to a safe and smooth transition of operations so that our employees, partners and local, state and federal government officials all feel that we have handed over these important assets in the right way."

The total purchase cost comprises $4 billion (€3.6 billion) payable near-term, and $1.6 billion (€1.45 billion) through an earnout thereafter. The transaction, which is subject to state and federal regulatory approval, is expected to be completed in 2020.

Janet Weiss, regional president of BP Alaska, added: "Today's announcement marks the start of an exciting new chapter for Prudhoe Bay. Alaska has been a core part of BP for 60 years and saying goodbye will not be easy. Our people have achieved incredible success over the decades developing and maintaining these hugely important assets, but we are confident this sale is in BP's and the state's best interests and the business will be best positioned for the future with Hilcorp. We will do all we can to ensure they are able to quickly build on the strong foundation that we and others have built here."

Around 1,600 BP employees are currently working for the company in Alaska; BP has committed to providing clarity on their future prospects as soon as possible, as part of the transition process with Hilcorp.

Dudley added: "Our exit from Alaska does not in any way diminish BP's commitment to America. We remain very bullish on the US energy sector. In just the last three years we have invested more than $20 billion [€18.1 billion] in the US and we will continue to look at further investment opportunities here."