BP Considers $1B US Pipeline Share Sale

BP Explores 49% Stake Divestment in U.S. Gulf Pipeline Network

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On October 3rd, BP Plc (BP.L) made waves in the energy sector as it explores the possibility of divesting a 49% stake in its extensive U.S. oil and gas pipeline network located in the vibrant Gulf of Mexico region. Sources familiar with the matter have shared that this strategic move aims to generate as much as $1 billion in funds for the company.

This prospective divestment aligns with BP's overarching financial goals, which include reducing its debt load while preserving its commitment to shareholders through consistent dividend payments. While the company did raise its shareholder payouts by an impressive 10% during the second quarter of this year, BP's net debt still stands at a considerable $23.7 billion.

To facilitate this move, BP has created a new entity where it will retain a majority 51% ownership stake and proceed to sell the remaining 49%, as disclosed by our sources. The pipelines within this entity have been churning out substantial earnings, boasting an impressive 12-month figure of approximately $200 million, adding an exciting dimension to this potential transaction.

It is crucial to note that, at this juncture, no deal has been finalized, and details remain confidential. Therefore, the sources have requested anonymity to maintain the integrity of this sensitive matter. BP, as expected, has refrained from commenting on these developments.

BP's prominence in the U.S. Gulf of Mexico is undeniable, as it consistently ranks among the largest producers of oil and natural gas in the region. As per the information available on their official website, the company anticipates achieving a daily production output of approximately 400,000 barrels of oil equivalent by the mid-2020s. BP currently operates five offshore platforms in the Gulf of Mexico, with its latest addition, the Argos platform, commencing operations in April.

Among the notable pipelines in which BP holds stakes are the 161-mile Mars Oil Pipeline, the 89-mile Endymion Oil Pipeline, and the 115-mile Cleopatra Gas Pipeline, all contributing to the company's strong presence in this dynamic energy landscape.

Notably, this potential divestment follows a pattern for BP in the U.S. asset market. In 2021, the company established a venture focused on infrastructure for transporting refined products. During this venture, investment firm Sixth Street Partners acquired a 49% stake for approximately $700 million, a move that garnered significant attention. More recently, Sixth Street further bolstered its investment with an additional $400 million contribution, according to reports from Bloomberg News.

As BP continues to navigate its strategic course, including the search for new leadership following the resignation of former Chief Executive Bernard Looney last month, it remains a pivotal player in the evolving landscape of the U.S. energy sector.

Source : Reuters (Reporting by Shariq Khan, David French and Ron Bousso)