BP renegotiates terms of $5.6bn Alaska sale

BP said it had renegotiated the terms of the $5.6bn (£4.5bn) sale of its Alaska business in favour of buyer Hilcorp to take account of volatile markets and the depressed oil price.

The purchase price will remain the same but the structure and timing of payments have been changed, BP said. Hilcorp had originally agreed to pay BP $4bn in the near term and $1.6bn through an earn-out later. The US energy group paid BP a $500m deposit when the deal was signed in 2019.

Under the revised terms Hilcorp will pay BP less during 2020. The companies will share cash flow in the near term and will have interest-bearing vendor financing. More of the sale price could also be subject to earn-out arrangements.

The FTSE 100 oil company said the changed terms would "maintain the majority of the value of the transaction" and give the companies flexibility to manage payments in volatile oil markets. The price of oil has crashed during the Covid-19 crisis and the US oil price turned negative for the first time.

William Lin, BP's chief operating officer for upstream regions, said: "We have worked closely with Hilcorp to reconfirm our commitment to completing this deal. The agreed revisions respond to market conditions while retaining the overall consideration.

"We look forward to progressing swiftly to completion and for Hilcorp to take over the operation of this important business. We are confident that completion of this sale is the right thing for both parties, for the business and for Alaska."

BP said it expected the deal to be completed in mid-2020 as planned. The sale is part of BP's programme to sell $15bn of assets by mid-2021.