(BP) BP Receives Wytch Farm Bid

British energy giant BP Plc. (BP) has received a bid for its stake in the Wytch Farm oil field, located in southwest England. The bidder – Premier Oil – is the second largest partner in Wytch Farm after BP. As of now, BP holds a 67.81% operated interest in Wytch Farm, while Premier has a 12.38% stake.

Earlier in May, BP had agreed to sell its interests in Wytch Farm and surrounding oil fields in Dorset to privately held Perenco for $610 million. The sale was subject to partner pre-emption rights.

Premier has exercised its pre-emption rights and lodged an offer for 17.7% of BP’s interest. Following the transaction, Premier will raise its interest in the field to 30.1%.

BP plans to divest up to $30 billion of assets by the end of 2011 as announced in July 2010, the sale of these interests being a part of the said plan. The divestment of Wytch Farm is a part of BP’s deliberate aim to invest in its core business portfolio in northern and central North Sea, West of Shetland (off the northeast coast of Scotland) and Norway.

The Gulf of Mexico oil spill definitely ruptured the basic fundamentals of BP, but its efforts to combat the related consequences are gaining traction. The company is well on track with its $30 billion divestiture program, which focuses mainly on upstream assets. This will help BP to reduce its net debt level to $10–$15 billion by the end of 2011.

Management remains positive on the company’s growth profile. It looks forward to a marked recovery, as well as consolidation to reduce operational risk or oil spill-related assignments. However, investors remain concerned about BP’s long-term growth prospects as its upstream activity might be affected by limited access to its U.S. acreages.

BP currently holds a Zacks #3 Rank (Hold), implying that the stock is expected to perform in line with the broader U.S. equity market over the next one to three months. Royal Dutch Shell (RDSA) and Total SA (TOT) are the major competitors of BP.

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