BP to sell Colombian business for $.9B to Ecopetrol, Talisman consortium

By Phaedra Friend Troy

British producer BP (NYSE:BP) has agreed to sell its Colombian oil and natural gas exploration, production and transportation business to a consortium consisting of the Colombian state oil company Ecopetrol (51 percent) and Canadian producer Talisman (49 percent) (NYSE:TLM).

For a consideration of $1.9 billion, the consortium is purchasing 100 percent of the shares of BP Exploration Company (Colombia) Limited (BPXC), a wholly-owned subsidiary of BP.

Holding an estimated 60 million barrels of oil equivalent and producing 25,000 barrels of oil equivalent a day, the Colombian assets include five producing fields in four association contracts and two offshore exploration blocks. The assets also include four separate pipeline interests.

“BP has been involved in Colombia for more than 20 years and played a major role in finding and developing the country's major oil fields,” said BP chief executive Tony Hayward on the divestiture. “These have contributed significantly to BP's global production over the years, but it now makes sense for the assets to go to owners more willing than BP to invest in their future development."

The upstream assets include 31 percent interest in the Tauramena and Rio Chitamena, as well as 50 percent interest in the Recetor and Piedemonte onshore exploration and production blocks. The producing fields on the blocks include the Cusiana oil and gas field, and the Pauto and Florena fields.

Offshore Cartagena, BPXC owns 40.56 percent interest in the RC4 and RC5 exploration blocks.

The assets also include interest in the Cusiana gas processing facility, as well as interests in four pipelines, including 24.8 percent interest in the OCENSA crude oil pipeline. The midstream assets measure 1,600 kilometers long for crude transport and 400 kilometers long for gas transport.

BPXC employs 470 personnel, the majority of whom are expected to remain employed with the new owners.

The Colombian transaction is a part of the $30 billion asset divestment strategy BP has undertaken over the next 18 months to pay for its obligations in the Gulf of Mexico following the Deepwater Horizon accident and Macondo oil spill. BP has already announced a $7 billion divestment agreement with Apache Corporation, and the British company has begun the process of divesting its assets in Pakistan and Vietnam, as well.

The terms of the sale agreement require that Ecopetrol and Talisman pay BP a cash deposit of $1.25 billion with the balance due on the completion of the sale.

The sale is subject to customary regulatory approvals and is expected to be completed by the close of 2010.

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