US independent oil exploration and production company Hilcorp has taken over management of Prudhoe Bay oil field in Alaska (United States), after the state regulators authorised BP to transfer its upstream assets, which includes 176 oil and gas leases on the North Slope, and in more than 250 surface-use permits. With this acquistion, Hilcorp becomes the second largest oil producer in Alaska. The Regulatory Commission of Alaska is yet to approve Hilcorp’s acquisition of BP’s 49% stake in the Trans Alaska Pipeline System (TAPS).
In August 2019, BP agreed to sell its entire oil and gas business in Alaska to Hilcorp for a total consideration of US$5.6bn. The transaction includes all of BP's upstream and midstream activities in Alaska, including BP Exploration, its upstream oil and gas company that holds interests in the giant Prudhoe Bay field, and BP Pipelines that owns interests in the TAPS). In April 2020, BP and Hilcorp amended the terms of the US$5.6bn sale of BP's assets in Alaska – whose value remains unchanged – adjusting the structure and phasing of payments. Under the original agreement, Hilcorp paid BP a US$500m deposit on signing of the transaction in August 2019 and the group had to pay BP US$4bn near-term and US$1.6bn through an earnout thereafter. Under the revised agreement, Hilcorp will make lower payments in 2020 and will have more flexibility to phase and manage payments to accommodate current and potential future volatility in oil prices.
BP has been active in Alaska since 1959, drilling for the Prudhoe Bay oil field in 1968 and producing first oil from this field in 1977. So far, the Prudhoe Bay oil field has produced more than 13 Gbl of oil and is estimated to have the potential to produce more than 1 Gbl. BP is the operator of the field with a 26% stake. BP also owns non-operating interests in the Milne Point and Point Thomson producing fields. In addition, BP holds non-operating interests in the Liberty project and exploration lease interests in the Arctic National Wildlife Refuge (ANWR). In the midstream sector, BP contributed to the construction of the Trans Alaska Pipeline in the mid-1970s; the group also owns interests in the Milne Point pipeline and the Point Thomson pipeline that will be sold as well.