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According to a Reuters report BP will look to disinvest assets worth $10 billion in the US to pay for the Gulf oil disaster losses. This will include stakes in the aging Alaskan Prudhoe bay prospect whose production has gone down tremendously, the downstream refineries and petrol stations, retail operations that can be easily sold for ready cash. BP will need to generate cash quickly to pay for the compensations for the Gulf Oil disaster, for which an escrow account of $20 billion has been created and disbursements are being made efficiently and quickly by the same experienced team which had handled the 9/11 compensations.
Whereas in normal circumstances this should have not been a problem, as BP holds only 65% stake in the disaster struck Macondo Gulf Oil prospect, the reason why BP has been forced to disinvest is because APC Anadorko the American company which holds 25% stake has reportedly refused to pay up because the accident was clearly not by chance, but due to negligence and cost cutting by BP. BP had sent a request to APC Anadarko in the month of June to share its burden of cost and pay $272 million. APC Anadarko who had voiced its opposition to the payment, formally refused to pay up in the first week of July citing BP's recklessness as reason of the disaster for which it could not be held responsible.
Though BP had threatened to sue APC Anadorko initially, the beleagured oil giant is not equipped to open another legal front as it will be enmeshed with thousands of cases in the near future of compensations in each of the four gulf states that could well exceed $50 billion by initial estimates. Besides having its partner and prospect stakeholder as an adversery would open it to further scrutiny which BP wants to avoid at all costs today.
Extrapolating from the Exxon Valdez gulf oil claim analysts estimate that BP would have to shelve out upward of $40 billion over a 10 year period to close all the litigation cases beside pay the fines which could exceed over $10 billion. Without its partners sharing the load BP will be strained for cash to facilitate such payments as its US operations are already in a limbo partly because of the boycott and partly due to the adverse sentiment, brand value loss, stock price loss, and regulatory measures being taken against it.
Under such hostile circumstances BP found it a prudent option to plan the disposal of assets of the the US operations, now that it was able to temporarily cap the oil leak. BP's asset sale could be good news for energy companies willing to invest in ready to use downstream facilities. The company as widely expected is going in for limited sale of downstream facilities worth $10 billion along with the sale of its Alaska exploration site.
Oil and Gas company Apache Corporation is reportely in talks to buy BP's assets and is seeking to raise $6 billion to finance the same. Whereas the value of the retail units are comparatively easy to assess, assessment of the true worth of the Alsaska exploration which is reportedly a quarter of its 1980 peak production values, will be hard work, because BP has been always a smart cookie to whose asset value could be well and truely inflated. So if Apache Corporation buys off BP's assets on the face value decalaration, without its own detailed feasibilty study, it could face a tough time in the distant future.
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