BP Considers $1 Billion Stake Sale in US Pipelines – Sources, by Reuters

By Shariq Khan, David French, and Ron Bousso

BP Plc is considering the sale of a 49% interest in its oil and gas pipeline network in the Gulf of Mexico, aiming to generate up to $1 billion, according to sources familiar with the situation.

This potential sale is part of BP’s strategy to reduce debt and sustain its dividend payments. Following a 10% increase in its shareholder payout in August’s second-quarter earnings report, BP’s net debt currently stands at $23.7 billion.

The company has transferred its stakes in Gulf of Mexico pipelines into a new entity, in which it will retain a 51% ownership while looking to sell the remaining interest, the sources indicated.

The pipeline operations have been generating approximately $200 million in earnings before interest, tax, depreciation, and amortization over the past year, as per the sources. However, they also noted that no agreement is guaranteed and spoke on the condition of anonymity due to the confidential nature of the discussions. BP has not issued any comments on this matter.

As one of the largest oil producers in the Gulf of Mexico, BP is projected to produce around 400,000 barrels of oil equivalent daily from the region by mid-decade. The company operates five offshore platforms, with its most recent addition, Argos, beginning operations in April.

BP’s interests include significant pipelines such as the 161-mile Mars Oil Pipeline, the 89-mile Endymion Oil Pipeline, and the 115-mile Cleopatra Gas Pipeline.

This move is not unprecedented for BP, as the company has previously sold stakes in its U.S. assets. In 2021, it formed a partnership to transport refined products, where investment firm Sixth Street Partners acquired a 49% stake for approximately $700 million. Reports indicate that Sixth Street made an additional investment of $400 million last month.