BP is seeking buyers for a system of plants and pipelines in Canada that may fetch $2 billion or more, said people with knowledge of the matter, as the oil company moves to exit slower-growing businesses.
The London-based oil producer tapped Credit Suisse Group AG to look for buyers of the assets that handle natural-gas liquids such as propane and ethane, the people said, speaking on condition of anonymity because the talks are private. Midstream energy companies such as Calgary’s Provident Energy Trust and infrastructure funds may be among the potential suitors when the auction starts next year, the people said.
BP is shedding mature assets after the spill at its Macondo well in the Gulf of Mexico left it facing a bill projected to reach $40 billion and forced the resignation of Chief Executive Officer Tony Hayward. The oil company said in July it was planning to sell $30 billion in assets. It has so far raised $21 billion selling fields from Colombia to Pakistan.
“BP is cleaning the closet,” said Jason Kenney, an analyst at ING Wholesale Banking in Edinburgh. “These are infrastructure assets and they’ve offloaded their upstream gas stuff, so this has become peripheral. BP has presented a much accelerated divestment program that’s been very successful.”
Robert Wine, a BP spokesman in London, declined to comment.
BP sold other Canadian gas assets as part of a $7 billion deal with Apache Corp. last month. The company’s remaining pipelines and plants for liquid fuels may be useful for oil sands production that relies on generating steam to separate crude, ING’s Kenney said.
BP’s natural gas liquids assets in Canada include fractionation plants at Sarnia, Ontario, and Fort Saskatchewan and Empress, Alberta, according to BP’s website.
For Provident, which has a minority stake in the Sarnia plant, the BP assets would roughly double the company’s size. Provident has a market valuation of about C$2.7 billion ($2.7 billion) including debt, and trades at about 9 times its last twelve months’ earnings before interest, taxes, depreciation and amortization.
Glen Nelson, an investor relations representative at Provident, declined to comment.
Other companies in the natural gas liquids business that may take a look include Keyera Facilities Income Fund in Calgary, and Sempra Energy, based in San Diego, California, the people said, along with private-equity firms such as Riverstone Holdings LLC and First Reserve Corp.
© Copyright 2017 Bloomberg News. All rights reserved.