BP Plc is reportedly considering selling a 49% stake in its U.S. oil and gas pipeline network in the Gulf of Mexico, with hopes of raising up to $1 billion, according to insiders. This potential divestment is aimed at helping BP meet its debt reduction and dividend maintenance targets. In the second quarter, BP increased its shareholder payout by 10%, despite its net debt amounting to $23.7 billion.
Sources indicate that BP is creating a new company where it will hold a 51% position and sell the remaining stake in the U.S. Gulf of Mexico pipelines. This entity is said to generate an annual earnings before interest, tax, depreciation and amortization of approximately $200 million. However, these sources also emphasize that no deal has been solidified and maintain anonymity due to the confidential nature of the matter. BP has chosen not to comment on the situation.
BP is one of the prominent players in the U.S. Gulf of Mexico oil and natural gas production, with expectations to achieve a daily output of around 400,000 barrels of oil equivalent by the mid-2020s. The company operates five offshore platforms in the region and April saw the commencement of Argos, its fifth platform.
Noteworthy pipelines in which BP holds stakes include the 161-mile Mars Oil Pipeline, the 89-mile Endymion Oil Pipeline, and the 115-mile Cleopatra Gas Pipeline, according to the company’s website. It’s worth mentioning that this wouldn’t be the first time BP has sold a stake in U.S. assets. Earlier this year, a joint venture was established for refined products infrastructure, with investment firm Sixth Street Partners acquiring a 49% stake for about $700 million. Bloomberg News recently reported that Sixth Street subsequently invested an additional $400 million.
BP is currently in the process of searching for new leadership, following the resignation of former Chief Executive, Bernard Looney, last month. Looney resigned due to undisclosed personal relationships with employees.
(Source: Shariq Khan | David French | Ron Bousso | Reuters | Investing.com)
