BP offloads Alaskan oil fields

Oil major BP is selling interests in four small North Slope oil fields to a relatively new Alaska oil producer owned by Texas billionaire Jeffery Hildebrand.

While the price was not disclosed, analysts have suggested that Hilcorp, one of the biggest privately-held independent oil and gas companies, could be paying at least $1.5 billion (£892.62 million).

The move is widely seen as driven by tax changes. BP is not pulling out of Alaska and will continue to operate the massive Prudhoe Bay oil field, where it is building two drilling rigs at a cost of $1 billion, but decided to sell the fields after Alaskan governor Sean Parnell abandoned a system that tied oil producers' taxes to the price of crude. This encouraged new exploration efforts that could boost the state's oil output considerably.

Under the deal, which still requires the relevant approvals, Hilcorp will gain all of BP's interest in the Endicott and Northstar oilfields as well as a 50% interest in the Liberty and Milne Point fields.

A BP spokesman said the oil major's share of the fields being sold is just under 20,000 barrels of oil a day (bopd), which is less than 15% of its North Slope production of about 140,000 bopd.

In 2011 and 2012 Hilcorp bought key Chevron assets in Cook Inlet, and now is the area's dominant producer of oil and natural gas, having reversed a 20-year decline in oil production there. Using new technology, it has increased production in mature areas, and now produces the equivalent of more than 30,000 bopd, including natural gas converted into its oil equivalent.

Major oil producers sometimes sell interests in ageing fields to their smaller, more aggressive rivals who bring different ideas and often much-needed capital.

The new operators can generally bleed sections that were bypassed the first time around because they carry lower overheads with few of the oil majors' corporate baggage such as head offices and marketing.

Hildebrand is best known for flipping the Eagle Ford shale of Texas to Marathon Oil for $3.5 billion in 2011, which netted around $1.4 billion after tax.

BP shareholders were unfazed by the move which saw the shares edge down by 0.65% to 483.45p.