BP Divests Non-Controlling Interests in U.S. Onshore Midstream Assets for $1.5 Billion

BP Divests Non-Controlling Interests in U.S. Onshore Midstream Assets

In a strategic move to unlock capital, BP has announced its decision to divest non-controlling interests in its U.S. onshore midstream assets to the private investment firm Sixth Street for a total of $1.5 billion. This transaction involves the Permian and Eagle Ford midstream assets of BP's subsidiary bpx energy, which is primarily responsible for BP's operations within the U.S. onshore oil and gas sector.

The agreement is structured into two phases, with the first phase involving approximately $1 billion to be paid upon signing the deal. The remaining balance is anticipated to be settled by the end of the year, pending regulatory approvals. The divestment allows BP to streamline its financial portfolio while maintaining operational control over critical midstream infrastructure, which is instrumental in connecting oil and gas production with third-party pipeline systems.

With this transaction, bpx energy will see its ownership stake shift from full control to 51% in the Permian midstream assets, and from 75% to 25% in the Eagle Ford midstream assets. Sixth Street will acquire the remaining non-controlling interests in both locations. Kyle Koontz, CEO of bpx energy, expressed optimism about the deal, describing Sixth Street as a valuable partner in enhancing the success of BP's operations in these regions.

Moreover, Koontz emphasized the significance of such midstream investments in the drive for value creation, emissions reduction, and ensuring the flow assurance of energy products to the market. The outgoing non-controlling interests are projected to yield an annual impact of approximately $100 to $200 million on BP's income statement, further supporting BP’s ongoing financial strategies.

This divestment is part of BP's broader goal to achieve $20 billion in divestments by the end of 2027. This move aligns with BP's efforts to refocus on core assets while ensuring that they continue to lead in sustainable energy production. The company has found ways to enhance the efficiency and safety of their operations in the dynamic landscapes of the Permian and Eagle Ford basins, which have been pivotal to oil and gas production in the U.S.

bpx energy manages its operations with an entrepreneurial spirit, utilizing advanced technologies to boost production and minimize emissions while integrating BP's broader business strategies in supply, trading, and shipping to maximize overall value generation.

In conclusion, this divestment marks a significant milestone for BP, allowing it to redirect resources and reaffirm its commitment to operational efficiency and sustainable practices in its U.S. operations. As BP continues to evolve its business model, strategic partnerships like the one with Sixth Street will be crucial for sustaining growth and contributing to the company's ambitious divestment goals. The company’s management is looking forward to the results of this strategic divestment and its ability to provide a solid foundation for future endeavors in energy production.