British energy giant BP Plc (BP) has agreed to sell its interests in the Pompano and Mica fields in the Gulf of Mexico to Louisiana-headquartered independent oil and gas explorer Stone Energy Corporation (SGY) for $204 million in cash.
Per the deal, a subsidiary of Stone Energy, Stone Energy Offshore, LLC, will acquire BP’s 75% operated working interest in the five-block Pompano field and 50% non-operated working interest in the Mica field. ExxonMobil Corporation (XOM) is the operator of Mica field, holding the remaining 50%.
Simultaneously, Stone Energy will also take over BP’s 51% operated stake in Mississippi Canyon Block 29 and interests in certain leases in the proximity of the Pompano field. Anadarko Petroleum Corporation (APC) and Hunt Oil have a respective 22% and 27% stake in Mississippi Canyon Block 29. Anadarko holds the remaining 25% interest in the Pompano field.
Both Pompano and Mica fields produce oil and gas through the Pompano platform. The platform is a four-leg, 12-pile fixed structure sitting in 1300 feet of water, about 120 miles southeast of New Orleans. Pompano can produce upto 60,000 barrels of oil and 135 million cubic feet of gas per day.
The completion of the sale is expected in 2012, subject to the pre-emption rights of various co-working interest owners. Following the sale of Pompano and Mica fields, BP will carry on operating seven platforms in the Gulf of Mexico. Some of the prominent among these include Thunder Horse, Atlantis and Mad Dog, with long production profiles and development programs.
BP’s new agreement is in line with its divestment program that sees the British oil major get rid of its mature, non-core upstream assets to create a portfolio with stronger growth potential from a smaller base.
BP has a Zacks #3 Rank, which is equivalent to a Hold rating for a period of one to three months. For the long term, we recommend a Neutral rating on the company.
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