BP Scales Down Investments in North Sea, Sells Three Fields to TAQA

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Researched by Industrial Info Resources (Sugar Land, Texas)--BP plc (NYSE:BP) (London, England) has agreed to sell its interests in three central oil and gas fields in the North Sea for $1.06 billion to Abu Dhabi National Energy Company (TAQA) (Abu Dhabi, United Arab Emirates), the state-controlled energy company of Abu Dhabi. The asset sale, which is subject to approval by regulators, is part of BP's strategy to raise funds for payments resulting from the 2010 Deepwater Horizon disaster in the Gulf of Mexico.

Assets include BP's interests in the BP-operated Maclure, Harding and Devenick fields and non-operated interests in the Brae fields and the Braemar field. According to a statement, the latest agreement with TAQA means that BP has now sold assets worth $37 billion, in line with plans to raise $38 billion in connection with the oil spill by the end of 2013.

The Deepwater Horizon disaster was a 2010 explosion that killed 11 workers and led to the largest oil spill in U.S. history. The company has so far set aside $42 billion to pay fines and damages resulting from the spill, and that amount may yet grow. Earlier this month, BP agreed to plead guilty to 11 counts of misconduct or neglect of ship officers and other charges. It also agreed to pay $4.5 billion in fines. Paying for the spill has forced BP to change.

Under Bob Dudley, who became CEO in October 2010 following the departure of Tony Hayward, BP has been selling smaller assets while holding onto promising large resources that it hopes to exploit with its expertise in developing large projects. "The deal is line with BP's strategy to focus on a smaller number of higher-value assets," Dudley said in a statement.

"The deal would add 21,000 barrels of oil equivalent a day to TAQA's output and add 91 million barrels to the reserve base," said Carl Sheldon, chief executive of TAQA, according to Bloomberg Television. TAQA already commanded an output of about 45,000 barrels of oil equivalent a day after enhancing output from fields that were acquired from Royal Dutch Shell (NYSE:RDS.A) (The Hague,Netherlands) and ExxonMobil (NYSE:XOM) (Houston, Texas) in 2008 for $631 million. TAQA, is the largest investor from the United Arab Emirates in Britain, having invested more than $3 billion in four years. TAQA, which has investments in the energy and power sector from India to the Middle East and Canada, aims to spend about $2 billion per year on capital investments.

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