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BP sells Mexican oil fields

08-15-2012 10:46 BJT

Global oil giant BP announced its sale of a group of its Mexican oil fields, valued at $7.9 billion dollars, as part of its strategy to unloads assets following its 2010 spill in the region. British energy giant BP, the world’s 3rd largest energy producer is shedding what the company calls "older, non-strategic assets".

The firm is asking for up to $7.9 billion for some of its oilfields in the Gulf of Mexico, according to Bloomberg news. It’s all part of a plan to give BP more flexibility to reshape its U.S. operations by freeing up 5 to 6 billion in cash, after taxes, to pay down its liabilities.

Stephen Leeb, Leeb Group Founder said, “It allows them to pursue projects that they can get more oil out of and it clears puts behind the worst episode in the company's history. By in large it lets them pursue current projects. I don't think they'll use that money to buy speculative properties.

I think they will try to develop what they have.” BP’s announcement last week to sell its Texas City refinery along with Monday’s agreement to sell another refinery in Carson, California, brings the total value of the firm’s divestments since the beginning of 2010 to $26.5 billion.

Experts say this is a good strategy for BP—sell $38 billion worth of assets by 2013 to repay bills related to clean-up, fines, and compensation from the “Macondo spill” in the Gulf of Mexico—the worst offshore oil spill in U.S. history. Better known by the name of the oil rig involved, Deepwater Horizon. That incident resulted in 11 deaths, widespread environmental damage and wiped out a third of BP’s market value in the process.

Jeff Colgan, American University Assistant Professor said, “One of the reasons why BP might be interested in raising extra cash right now is to give it some more strategic flexibility. And in particular, it has ongoing talks right now—a ninety-day period with a state-owned company in Russia called ‘Rosneft’ that’s bidding on its investment in TNK- BP.

And so it would make sense for BP to want to have a little extra cash on hand to give it some options.” If BP finds a buyer for the offered Mexican oil fields, the firm will have successfully unloaded just over 90% of the assets that it wants to sell, putting into question what else the oil giant might put on the offering block.

Editor:James |Source: CCTV.com

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