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BP selling assets at a disadvantage to offset Gulf clean-up costs

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Steve Chiotakis: The British oil giant BP is paying an enormous amount of money to clean-up and compensate those affected by the disaster in the Gulf of Mexico. It’s already spent $4 billion toward that end. Not to mention the huge escrow account asked for by the White House. Now it’s looking for ways to find money to pay those costs by selling some of its assets. The BBC’s Rebecca Singer is with us live from London with the latest. Good morning, Rebecca.

Rebecca Singer: Good morning.

Chiotakis: So what has BP sold?

Singer: Well, they’ve agreed to sell a range of oil and gas fields in Texas, Southwest New Mexico, Western Canada and even Egypt. Now they’re selling them to a U.S. company called Apache. And they’ve been referred to as mature fields. Basically BP reckons they’re past their peak, but actually Apache is well known for buying up these types of field and boosting their production.

Chiotakis: And how valuable, Rebecca, were these fields? I mean these assets to BP’s future growth?

Singer: Well by no means are these core assets, and their sale doesn’t represent a major restructuring of the company in any way. And even $10 billion isn’t a huge amount for BP. But Robert Talbut, who’s the chief investment officer at Royal London Asset Management — now they’re one of BP’s major shareholders — he admitted that this was a forced sale to some extent and because of the Gulf of Mexico spill, BP wouldn’t have got the best price.

Robert Talbut: Their negotiating position was probably a lot less strong than it would have been six months ago. It wasn’t a great hand to play, actually. But I think the price is reasonable, but it’s not as good as you might have expected.

Now some analysts have been surprised at how quickly they’ve done this sale, although they did announce it a couple of weeks ago. But they do still need government and regulatory approvals before they can be completed.

Chiotakis: The BBC’s Rebecca Singer, reporting from London for Marketplace. Rebecca, thanks.

Singer: You’re welcome.

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