BP is selling its stake in a large Alaska oil field, in agreements with ConocoPhillips that will increase its holdings in a field in the North Sea, BP said in a statement Tuesday.
If regulators approve the deal, BP's decision to exit the Kuparuk field will increase ConocoPhillips assets in Alaska, where it already is the largest oil producer. And it will further shrink BP's presence in Alaska — the company sold some fields to Hilcorp in 2014 — though BP will still operate Prudhoe Bay, the largest oil field in the state.
Observers said the deal should be good for the state, given ConocoPhillips aggressive and successful efforts exploring and developing the western edge of the North Slope fields.
"We view this as great news," said Andy Mack, the state's Natural Resources commissioner. "ConocoPhillips has demonstrated an appetite for continuing to invest heavily in Alaska. This has the potential to increase production in Alaska, which is good for our economy and good for our coffers."
[ConocoPhillips announces new oil discoveries after big exploration season.]
Also, BP will focus its future efforts in Alaska on the Prudhoe Bay field, where it retains its 26 percent share, providing daily operations on behalf of major partners ConocoPhillips and ExxonMobil. The companies are taking steps to conduct new drilling supported by a seismic survey of the area that should be completed in 2019.
"In Alaska, this transaction will increase our focus on managing our deep resource base at the massive Prudhoe Bay oilfield and help enable a more competitive and sustainable business for BP," said BP Upstream chief executive Bernard Looney, in the statement.
Under the pacts, London-based BP will sell its entire 39 percent stake in the Kuparuk field and related satellites to ConocoPhillips, as well as its holding in the Kuparuk Transportation Co. that delivers oil to the main trans-Alaska oil pipeline.
BP will purchase a 16.5 percent stake from ConocoPhillips in the BP-operated Clair field, an offshore oil field west of Shetland in the United Kingdom. That will boost BP's stake to 45 percent in the field, while ConocoPhillips will retain a small portion.
Kuparuk is the second largest oil field in Alaska, producing about 108,000 barrels daily, behind Prudhoe Bay's roughly 280,000 barrels.
The deal will boost ConocoPhillips' ownership at Kuparuk to 95 percent, the company said. ConocoPhillips, based in Houston, Texas, will continue to operate that field.
"We believe this will allow the company to make more efficient decisions and enable more development of the field, and could lead to more oil production, more revenue for the state and more jobs for Alaskans," ConocoPhillips said in an email sent by Natalie Lowman, a spokeswoman with the company.
ConocoPhillips' oil production in Alaska, about 180,000 barrels daily in 2017, would grow by about 40,000 barrels, officials said. BP oil production in Alaska, about 110,000 barrels daily last year, would shrink by the same amount.
Dawn Patience, a spokeswoman with BP in Alaska, said the transaction will not have significant impacts to the company's employment numbers in the state, more than 1,600 direct employees.
"The state of Alaska will see little change, since the operators of the fields remain the same. The state will continue to collect taxes and royalties from production," Patience said in an email.
Meantime, the Clair field in the North Sea produced about 21,000 barrels of oil equivalent daily in 2017. But a new development is expected to come on line later this year that could add another 120,000 barrels. Barrels of oil equivalent measure the energy produced by the oil and natural gas that are often produced together.
"This is a further step in focusing our portfolio around core assets and developments which have the potential for significant growth," Looney said. "Clair is a key advantaged oilfield for our North Sea business, a giant resource whose second phase is about to begin production and which holds great potential for future developments."
The transactions are subject to approval from state, federal and UK regulators, but are expected to be completed this year, said the statement from BP, sent by Patience.
BP said it's not disclosing details of the transaction. Rumors of the deal were first reported in May.
[BP said to be in talks with ConocoPhillips in swap that includes Alaska assets]
Roger Marks, an oil and gas consultant who sometimes does work for both companies, said ConocoPhillips has been more aggressive at pursuing new development in Alaska than BP. Based on that track record, more ConocoPhillips ownership on the Slope is likely a good thing, Marks said.
The changes should not be large enough to raise serious anti-trust concerns from regulators about ConocoPhillips gaining too large a stake on the North Slope, he said.
Larry Persily, a former deputy Revenue commissioner for Alaska, said BP is giving up a tiny part of its global oil production for the promise of future oil and gas production in the North Sea.
"The deal makes sense" for both companies, he said.