Dominic Perkins, BP Project Manager, Mergers and Acquisitions, recently gave a presentation to the Aberdeen ELP group on “Asset Acquisitions and Divestments—Learning From BP’s North Sea Disposals.” Asset acquisitions have contributed to BP becoming the number two oil company in the world. BP has increased in value from a U.S. $70 billion to approximately $200 billion company, and much of this is attributable to acquisitions.
BP’s strategy consists of four elements:
Perkins explained acquisition and divestment terminology, walked the audience through the divestment process, and discussed associated issues. The three phases of the divestment process were explained in detail: marketing, sales, and purchasing agreement; execution/transition; and the project closeout. Some of the divestment-related issues raised included decommissioning and addressing the environmental side effects, complications associated with transfer of operatorship, and the involvement of joint-venture partners.
The North Sea, a maturing basin, is still a significant part of BP’s business. BP’s interest in the U.K. Continental Shelf (UKCS) represents 15–20% of its total asset base. During 2003, BP disposed of 20 of its operated assets in its North Sea asset base, representing an 11% reduction in BP’s North Sea production. The four major disposals in 2003 were:
Perkins highlighted the following factors as crucial to the success of BP’s asset disposals campaign: