Discussions are at an early stage, with private-equity firms among potential buyers
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This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (July 21, 2017).
LONDON -- BP PLC has approached potential buyers of its oil-and gas fields in the North Sea, people familiar with the matter said, a half-century after the company helped pioneer deepwater extraction there.
BP said it remained "committed to the U.K. North Sea," which the British company sometimes calls its "heartland." The company said it planned to ramp up its U.K. North Sea production to 200,000 barrels a day and pointed to important new developments there west of the Shetland Islands.
But the company has held discussions about selling the full range of its currently producing assets in the U.K. North Sea, people familiar with the matter said. The collection of oil-and-gas fields now produce the equivalent of about 150,000 barrels a day, with some nearing the end of their production lives.
The potential buyers include private-equity firms, the people said, which in recent years have swooped in to buy North Sea fields, lower their costs and extract profit.
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The people said the talks were at an early stage, and it isn't clear yet which fields BP would ultimately be willing to part with, if any.
"Our aim is to sustain a material business in the region for decades to come," said BP, which produces more oil and gas from the British North Sea than any other company.
The value of the assets BP approached buyers about wasn't known. Earlier this year, when BP's British-Dutch rival Royal Dutch Shell PLC sold stakes in U.K. North Sea fields that produce about 115,000 barrels a day, the assets fetched $3.8 billion.
The talks come as BP and other big energy companies reassess their portfolio of oil-and-gas fields as the crude-price downturn enters its fourth year. With prices stuck around $50 a barrel, BP, Shell and others have been looking to ditch oil fields that are nearly tapped out for cheap, quicker-hit options like U.S. shale.
The North Sea is a prime example. BP has been a leader in the North Sea since the mid-1960s, when exploration and production began. Along with Shell and others, BP helped make it one of the world's premier oil basins in the 1970s and '80s, its production peaked in the 1990s.
Since the peak, however, it has become more expensive to extract the remaining barrels from aging fields. BP already sold part of its interest in the North Sea's Magnus field to EnQuest PLC earlier this year.
"They can't get the returns in the North Sea compared to more attractive, lower-cost opportunities globally," said Fiona Legate, an analyst at Wood Mackenzie, the Scottish energy consultancy.
BP said it was firm about its commitment to the British North Sea. It is a major employer in Aberdeen, the Scottish port where its North Sea operations are headquartered.
BP is under pressure to raise cash this year to pay for continuing costs related to the Deepwater Horizon blowout that killed 11 people in 2010 and spilled millions of barrels of oil into the Gulf of Mexico. The company wants to raise $5.5 billion with various divestments this year. It is considering spinning off some of its U.S. pipelines into a separate public company.
BP is moving into a period of growth, which may require it to shed some of its older North Sea assets, said Oswald Clint, analyst at Sanford C. Bernstein.
"It's the same as Shell, they're selling producing assets, but not development or growth assets," Mr. Clint said.
Selling assets in the U.K. North Sea isn't straightforward. It costs billions to dismantle and dispose the North Sea oil rigs when the fields are fully tapped. As part of its deal to sell North Sea fields this year, Shell agreed to pay up to $1 billion in decommissioning costs.
-- Sarah Kent contributed to this article.
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(END) Dow Jones Newswires
July 21, 2017 02:47 ET (06:47 GMT)