BP Is Said in Talks for Conoco's U.K. Field Stake in Swap

(Bloomberg) -- BP Plc and ConocoPhillips are in discussions for an asset swap deal that would see the U.K. energy major gain a greater foothold in a key project in the North Sea and the U.S. explorer get Alaskan assets, according to people familiar with the talks.

BP is considering taking Conoco’s 24 percent interest in the Clair field, in which BP already holds a 28.6 percent stake and is the operator, the people said, asking not to be identified because the talks are private. In exchange, Conoco is likely to take some of BP’s assets in Alaska. BP describes Clair as “the largest undeveloped hydrocarbon resource” in the U.K. continental shelf.

The world’s biggest oil companies, including BP, have largely been selling their aging North Sea assets as they move funds to areas where it’s cheaper to produce oil and natural gas. Still, the region has seen a revival in recent years as new entrants infuse additional capital and fresh technology. BP itself has said it will focus on a few projects as it targets higher output.

No Decision

No final decisions have been reached between the companies and talks could still fall apart, the people said. A BP spokesman declined to comment. Conoco is not looking to sell its U.K. North Sea assets, Chief Executive Officer Ryan Lance said at the company’s annual general meeting this week.

“Unless formally announced by the company, we don’t comment on business development activity," Emma Ahmed, a spokeswoman for Conoco, said by email.

The people familiar with the talks didn’t say which Alaskan assets are being put on the table. Prudhoe Bay, which started production in the 1970s, is the biggest of BP’s fields there.

While Conoco has increasingly shifted its attention toward shale in the U.S., it’s continued to expand exploration in Alaska, where it was the biggest oil producer last year. In February, it announced a $400 million deal to buy Anadarko Petroleum Corp.’s stake in a project on the western North Slope, including an interest in the Alpine pipeline.

Conoco has also been reducing its exposure to the U.K. as fields age. The Houston-based explorer said in April it intended to cut 450 jobs in Britain between Oct. 1 and April 2020 as it ceased output through its Theddlethorpe Gas Terminal.

The Texas explorer is the operator or has interests in other U.K. fields including Britannia, Judy and Galleon.

--With assistance from Alex Nussbaum

To contact the reporters on this story: Kelly Gilblom in London at kgilblom@bloomberg.net, Dinesh Nair in London at dnair5@bloomberg.net.

To contact the editors responsible for this story: James Herron at jherron9@bloomberg.net, Rakteem Katakey, Dylan Griffiths

©2018 Bloomberg L.P.