BP Plc., the global oil giant, sold its majority stake in Wytch Farm, the largest onshore oil field in Western Europe. In a US$610 million deal, BP sold its majority stake of 67.81% to the Anglo-French private oil firm Perenco.
In as early as in July 2010, BP announced its plans to divest its assets to the tune of $30 billion by the end of 2010. The sale of its stakes in Wytch Farm is a part of that plan only. Before this deal, BP had already announced to divest around $25 billion. Already an immediate payment of $500 million has been made. Rest of the payments will be made by the end of 2011.
The strategic aim of BP in United Kingdom is to invest in more focused North Sea business portfolio in the Northern North Sea, Central North Sea, West of Shetland and Norway. According to BP sources, the North Sea Region is strategically very important in BP’s scheme of things.
The oil major is expected to garner considerable business from this region in the long run. Currently, BP is investing to the tune of $4 billion per annum in the North Sea region. It is investing in 4 major new development projects in the United Kingdom and 2 in Norway.
The Glamour of Wytch Farm
When you think of the oil industry of United Kingdom, the first thing that comes to your mind is the huge oil rigs, located in the wild waters off the north coast of Scotland. But the dry land of the country is no miser when it comes to oil.
With daily production capacity of 13,000 barrels of oil, the Wytch Farm can’t be ignored, particularly when the oil price has reached $100 per barrel. Wytch is UK’s biggest and most productive land-based oil field. This is ideally located in an oil-bearing zone, extending from coastal Dorset, through Hampshire to Surrey and Sussex.
Investment is pouring into Wytch Farm from various oil super behemoths such as BP and Shell as well as from upcoming oil minnows that are listed on the Alternative Investment Market (AIM) in UK. The relatively smaller players who have shown interest in Wytch include Providence Resources, Europa Oil & Gas, Wessex Exploration and Edgdon Resources.
Wessex Exploration, listed on the AIM, owns oil fields on the south coast, located in the vicinity of Hampshire’s New Forest along Poole in Dorset. Wessex has a 50% share in the PEDL238 exploration block. Europa Oil & Gas has also the required cash to begin its exploration work in other parts of Europe. Providence Resource is planning to use the cash that it generates from its Singleton field in East Sussex, to part-fund its other exploration activities.
All these show the importance of Wytch Farm among the oil companies. The strategic aim of BP may be somewhat different, resulting into BP divesting its stakes in Wytch, but other oil majors, particularly the minnows are eyeing at Wytch lucratively.
This is a Guest post from Marlon Powell who writes on finance related matters such as debt consolidation, settlement and other aspects of handling debts and managing finance for www.debtconsolidationcare.com