Beleaguered petroleum giant BP agreed Tuesday to sell oil and natural gas fields in the United States and other countries to rival Apache Corp. for $7 billion in its biggest move yet to raise money to pay reparations for the Gulf of Mexico oil spill.
The company announced plans to sell its Permian Basin fields in Texas and New Mexico — acquired as part of the purchase of Los Angeles-based Arco in 2000 — as well as properties in Canada and Egypt. Apache was said to be interested in BP's Alaskan assets, but they weren't part of the deal.
BP pledged last month to set up a $20-billion fund to pay claims for disaster victims. It planned to finance the fund by suspending its dividend for the rest of the year, cutting back capital spending and selling up to $10 billion worth of assets. Other asset sales are expected.
"This is a good deal for BP because it frees up more cash if they need it," said Phil Flynn, energy analyst for PFGBest Research.
The announcement comes days after BP placed a cap over the errant well, which had been spewing oil since the deadly April 20 explosion of the Deepwater Horizon drilling rig in the gulf. Eleven people were killed, and the subsequent spill has become among the worst in U.S. history, fouling beaches in five states.
Carl-Henric Svanberg, BP's chairman, said in a statement that the fields weren't central to BP's post-spill plans.
"Over the last two months the board has considered BP's options for generating the cash necessary to meet the obligations likely to arise from the Gulf of Mexico oil spill," Svanberg said. "The board believes that there are opportunities to divest assets which are strategically more valuable to other parties than they are to BP."
Houston-based Apache, which already operates near the BP properties, is known for its ability to extract oil from older fields that have been in operation for years.
"I think [Apache] looked at this as a once-in-a-lifetime opportunity that they just couldn't pass up," Flynn said.