Mark KleinmanJune 24, 2010 4:05 PM
I have learned that BP is exploring a sale of some or all of a controlling stake in a major Argentine oil producer under plans to raise billions of pounds to help strengthen its finances.
The oil company is examining a sale of its 60 per cent stake in Pan American Energy, which analysts value at about $9bn, alongside the possible disposal of a series of other assets in Latin America, reliable market sources have told me this afternoon.
BP has accelerated its disposal plans in the wake of the Gulf of Mexico oil spill, which has left it committed to funding a $20bn compensation pot, as well as facing potentially huge liabilities for the clean-up operation and the inevitable tsunami of lawsuits.
If BP decided to sell the entirety of its shareholding in Pan American, it would by itself almost entirely account for the $10bn of asset sales which the company has said it is targeting over the next 12 months.
The stake in Pan American has been a core part of BP’s Latin American operations since it was formed in 1997. Bridas and CNOOC, the state-owned Chinese energy giant, each own 20 per cent of Pan-American, and CNOOC is viewed by analysts as a likely bidder for BP’s stake if it is formally put up for sale.
BP, which declined to comment this afternoon, is also exploring the idea of selling smaller assets in Colombia and Venezuela. In Colombia, it owns 19 per cent of a joint venture which has some symbolic significance within the company because Tony Hayward, BP’s embattled chief executive, was once directly responsible for it; in Venezuela, BP owns a 30 per cent stake in a joint venture which it is now considering selling.
I should point out that BP is still at an early stage of evaluating which assets to sell and that firm decisions have not yet been taken. Analysts have speculated in recent weeks that Pan American and other BP interests on the continent might become available, although this is the first concrete indication that they are likely to be sold.
Given the timetable that BP is targeting, it makes sense for it to focus on selling non-core joint venture assets because they are more readily marketable to existing partners, according to a person familiar with the company’s thinking.
As I revealed last week, BP has brought in a specialist oil and gas banker from Standard Chartered to assist it with the disposal process.
The company is also bolstering its finances through new banking facilities, although a massive bond issue, which was reportedly being prepared last week, is not currently central to BP’s thinking.
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