BP agrees to $5.55 billion deal with Plains for Gulf assets

As it continues to unload property, partly to cover the expenses of the 2010 Gulf of Mexico oil spill, BP announced Monday it is selling offshore Gulf assets to Plains Exploration and Production for $5.55 billion in cash.

The transaction involves five properties, three operated by BP and two operated byothers, which BP said in May it would divest.

The operating assets are BP’s 100 percent interest in theMarlin hub, comprising the Marlin, Dorado and King fields; its 100 percent interest in the Horn Mountain field; and its 50 percent stake in the Holstein field. Plains also is buying Shell Oil’s 50 percent interest in the Holstein.

Non-operated assets in the deal are BP’s 31 percent stake in the Ram Powell field and its one-third interest in Diana Hoover field.

 “While these assets no longer fit our business strategy, the Gulf of Mexico remains a key party of BP’s global exploration and production portfolio and we intend to continue investing at least $4 billion there annually over the next decade,” said Bob Dudley, the company’s chief executive.

Under the terms of the deal, Houston-based Plains will pay $5.55 billion in cash for the assets. The deal is subject to regulatory approvals, pre-emption rights and customary post-closing adjustments, BP said.

The companies expect to close the deal by the end of 2012 and is part of a broader BP effort to sell $38 billion in assets by the end of 2013.

“This is a major program in BP; we are carrying out some of the largest changes in BP this company has seen in decades,” BP spokesman David Nicholas said in August, speaking of the divestiture program. “The upstream has been reorganized, and we have completely revamped safety and organizational risk. What we are doing at the moment is focusing the company for future growth.”

In a presentation on its website, Plains said the deal with BP will increase production by 62 percent in 2013 and the bulk of that increase — 82 percent — would come from rising oil production.

BP has sold more than $32 billion in assets since 2010 as part of a plan to divest its assets to focus on areas of growth, the company said.

The deal with Plains doesn’t signal an end to BP’s presence in the Gulf though, according to analysts, who say that the properties are among its lower producers.

These fields are not a big loss for BP,” said Stacey Hudson, an analyst with Raymond James. “There are plenty of smaller companies that are still trying to get in the Gulf that would happily buy up those older assets that are less profitable for BP.”

After the sale with Plains, BP will still operate four large deep-water platforms — Thunder Horse, Atlantis, Mad Dog and Na Kika — in the Gulf. The company also has interests in three other hubs — Mars, Ursa and Great White.