BP sells $7 billion of its assets to pay for spill

21 July 2010

Embattled BP has reported that it has sold $7 billion worth of its upstream assets in the US, Canada and Egypt to Apache Corporation.

News of the sale came as the FTSE 100 giant denied claims that chief executive Tony Hayward is set to step down.

The Times reported that his departure would come before 1 October if the ruptured Macondo well is sealed.

However, Hayward's determination to underline BP's value was present in his statement regarding the sale of some of its upstream assets in the US, Canada and Egypt to Apache Corporation.

Following feverish speculation over the past fortnight that the British oil major would strike a deal with the Canadian oil and gas group as part of its plan to dispose of assets, Hayward confirmed that it had struck an "excellent" deal.

"We have achieved an excellent price for a set of properties that are worth more to others than to BP. This is a good first step which underlines our ability and determination to get maximum value for everything we sell," Hayward said.

The sale, worth a cool $7 billion, comprises BP's Permian Basin assets in Texas and south east New Mexico, US; its Western Canadian upstream gas assets; and the Western Desert business concessions and the East badr El-din exploration concessions in Egypt.

Chairman Carl-Henric Svanberg commented: "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 oil spill.

"BP has an extremely strong asset base which is diversified geographically as well as by asset class."

The transaction - which is due to be finalised in the third quarter of this year - follows the announcement by BP last month that it was targeting divestments of up to $10 billion as it battles rising clean-up costs in the Gulf of Mexico.

On Monday, the group said costs had already rocked to $3.95 billion, including $207 million paid out in claims. As a result, it was forced to suspend its first, second and third-quarter 2010 interim dividends.

Hayward on the brink?

A BP spokesperson, however, denied the claims, stating that Hayward had the full support of the board and would remain in office.

Hayward has continuously come under fire for a series of gaffes made in interviews, including his statement, "I want my life back" and his inability to halt the leak which has been pumping oil into the ocean for three months.

A report in The Times suggested that Hayward's departure would make room for Robert Dudley, chief of BP's Gulf Coast restoration efforts, to take up the position and better defend the company against a possible takeover threat by rivals ExxonMobil and Anglo-Dutch giant Shell (RDSB).

Speculation surrounding Hayward and BP's future came as Prime Minister David Cameron was forced to answer questions surrounding the company in an official visit to Washington.

The company's relations with the US government have soured over the past few days, amid mounting fears that BP's latest efforts to stem the oil leak with a new sealing cap were causing further seepages elsewhere.

Earlier this week, Admiral Thad Allen, appointed to lead the US government's response to the disaster, said the US retained the right to remove the cap if their worries intensified.

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