By Dave Donaldson
Financial markets buzzed over the weekend in response to a news account that B-P was in the process of raising part of its twenty billion dollar commitment to cover damages caused by the Deepwater Horizon spill in the Gulf of Mexico. In an article that did not name any source, the Sunday Times of London said part of the money B-P needs would come from selling its holdings in Alaska’s rich Prudhoe Bay field. The Sunday Times also said that the company is in negotiations with Apache Corporation – a fifty five year old oil exploration and development company headquartered in Houston, Texas.
The speculation about the negotiations and sale grew today to include possibilities that Exxon-Mobil and PetroChina are interested in B-P’s Alaska holdings.
Steve Reinhardt, B-P’s spokesman for Alaska issues, declined to involve the company in the rumors.
This is market speculation and we don’t comment about that.
A much smaller company than B-P, Apache has in the past taken other B-P properties – most notably declining fields in the North Sea off the coast of Scotland – and made them profitable. It also competes with B-P in other markets, including the Gulf of Mexico. It lists no holdings in Alaska.
If any substance to the speculation develops, however, Alaska will know about Apache. The state has an interest if such a sale were to take place. Kevin Banks is Director of Oil and Gas.
The question for us is Do they have the financial wherewithal to manage these assets and to meet the obligations to the state that are required under our leases. And I think we’re also concerned and would be interested to know if the companies can take on the responsibility to grow these assets. To produce heavy oil in the future and to add to the production that is already there.
Banks cites completion of B-P’s Liberty development as an expensive project to complete. He also says that B-P has put an emphasis on preparing for the development of heavy oil in Prudhoe Bay and Milne Point fields. B-P is operator of those fields under state-approved Unit Agreements.
Banks says the state’s role arises when one company assigns a lease to another company.
That’s one place where the state has to make an active decision. Furthermore, in a change of an operator, that we participate in that with respect to the unit agreements that we have with all of the lessees. That is not an automatic process. It involves state review and a decision on our part.
As the purchase rumors spread today, Apache’s stock value dropped more than three percent – while B-P’s stock prices rose nearly eight percent.