BP to offload US oil assets in effort to fund BHP acquisition

BP is planning to raise over $3bn (£2.4bn) by offloading assets in the US as it looks to pay for a deal to buy oil fields from BHP.

The sales will help the company fund its $10.5bn acquisition of onshore assets in Texas and Louisiana from BHP, sources told Reuters.

BP has in the past said it would sell between $5bn and $6bn in assets to finance the deal.

Since the end of last month the oil and gas giant has held a series of informal talks with private equity firms to see if they can raise the cash needed for the deal.

US funds Carlyle and Warburg Pincus have both expressed interest in the assets, sources said.

It is looking to offload seven packages, all shale fields including in the San Juan basin by the Colorado-New Mexico border where the company has 9,000 wells. The portfolio generates around $700m in operating cashflow each year.

The news comes as investor up pressure on oil companies to increase returns and slash costs.

“That pressure is taking public companies out of the universe of buyers in the market, creating opportunities for private-equity companies,” said Andrew Dittmar, an analyst at Drillinginfo.

However, investors may be put off by the amount of gas on offer in the fields at a time when US gas production is high, pushing down prices.

London-listed BP is keen to focus on production from its assets in the Permian and Eagle Ford basins to match its rivals Exxon Mobil and Chevron who are set to up production in those areas.

BP’s onshore business BPX last week held a meeting with the management teams at potential buyers in New York after sending out information on the assets it is offloading.

The company closed up around one per cent on the London Stock Exchange to 502.5p yesterday.