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Arctic Directory 2022: Hilcorp enters North Slope
Acquiring BP’s interests in Milne Point, Endicott, Northstar and Liberty
Petroleum News, April 27, 2014, issue
Hilcorp is establishing a presence on Alaska’s North Slope as a working interest owner and operator.
In a major North Slope sale, announced April 22, 2014, BP has agreed to sell interests in some smaller fields to Hilcorp Alaska. The deal includes all of BP’s interests in the Endicott and Northstar oil fields and a 50% interest in Liberty and Milne Point. BP’s interests in oil and gas pipelines associated with those fields are also included.
Hilcorp will become the operator of all four fields, with a delay to 2015 for Liberty.
BP said it would focus on Prudhoe Bay, which it operates, and on an Alaska liquefied natural gas project. Hilcorp, which began operations in Cook Inlet in 2012, is largely focused on increasing production from mature fields, fields that major oil companies developed but are no longer a fit.
“There are some big benefits from this transaction,” Janet Weiss, president of BP’s Alaska region, said. “BP will be able to focus on maximizing production from Prudhoe Bay and advancing the Alaska LNG opportunity. … And the state gets another accomplished operator working the North Slope.”
Expansion for Hilcorp Hilcorp noted that this will be the company’s third major acquisition in Alaska since 2012, when Hilcorp purchased Chevron’s Cook Inlet interests closed followed by an acquisition of Marathon’s Cook Inlet assets.
“We are excited about this acquisition. Our ability to bring new life to mature basins is a great fit for these assets,” said John Barnes, senior vice president of exploration and production for Hilcorp Alaska.
State reaction Alaska Department of Natural Resources Commissioner Joe Balash told Petroleum News that what they’ve seen Hilcorp do in Cook Inlet “is outstanding and the indications we’ve gotten about what they intend to do with these North Slope assets suggests they will bring the same vigor and commitment of capital.”
The assets Milne Point, some 25 miles west of Prudhoe Bay, was discovered in 1969 and began production in 1985. BP became the operator at Milne Point in 1994.
Northstar is some six miles northwest of Prudhoe Bay offshore in state and federal waters. Production started from the field in 2001.
Liberty is on federal leases some six miles offshore in the Beaufort Sea east of Prudhoe Bay. BP drilled the Liberty discovery well in 1997.
Endicott is some three miles offshore and started production in 1987 as the first continuously producing offshore field in the Arctic.
BP said the assets included in the sale represent some 19,700 barrels of oil equivalent a day of net production for BP, less than 15% of the company’s net North Slope production.
Editor’s note: When the sale of certain BP North Slope assets to Hilcorp was announced April 22, financial details were not disclosed. But in an April 29 first quarter analysts’ call, BP executives said the sale brought in $1.25 billion. Bob Dudley, BP’s group chief executive, noted that in addition to the $1.25 billion, the sale included “a development carry for the Liberty field of up to $250 million,” that would bring the total to $1.5 billion.
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