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LONDON, UK / ACCESSWIRE / January 25, 2017 / Active Wall St. blog coverage looks at the headline from energy major BP PLC (NYSE: BP). The Company announced on January 24, 2017 that it has sold partial stake in the Magnus oil field and some associated pipeline infrastructure located in the UK's North Sea and in the Sullom Voe Terminal (SVT) on Shetland to EnQuest PLC. The deal is valued at approximately $85 million. Register with us now for your free membership and blog access at: http://www.activewallst.com/register/.

One of BP PLC's competitors within the Major Integrated Oil & Gas space, Chevron Corp. (NYSE: CVX), announced on January 05, 2017, that it will hold its quarterly earnings conference call on Friday, January 27, 2017, at 11:00 a.m. ET. AWS will be initiating a research report on Chevron in the coming days.

Today, AWS is promoting its blog coverage on BP; touching on CVX. Get all of our free blog coverage and more by clicking on the links below:

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Commenting on the asset sale, Bob Dudley, Group Chief Executive of BP said:

"EnQuest's experience of investing in and extending the life of mature assets in the North Sea make them a natural operator of Magnus and Sullom Voe in this later phase of their life. We believe this will enable them to prolong the life of the assets, benefiting the region and creating additional value for both EnQuest and BP shareholders."

Amjad Bseisu, CEO of EnQuest, added:

"We are a natural strategic partner to BP for maturing assets and this innovative structure represents a natural evolution of EnQuest's business."

The Sale Agreement

The assets being sold by BP include 25% interest in the Magnus oil field, 3% interest in the SVT and supply facility, 9% interest in Northern Leg Gas Pipeline (NLGP), and 3.8% interest in Ninian Pipeline System (NPS). The 3% interest in the SVT will be sold from BP's subsidiary company, BP Exploration Operating Company Limited's (BPEOC), current 12% stake. The total value of the asset sale transaction is approximately $85 million, which EnQuest will pay from future cash flows generated from these assets. The transaction does not call for any immediate cash flow. The transaction is expected to be completed in the next 6-12 months subject to regulatory and other third party approvals.

On completion of the sale, EnQuest will take over the operations of these assets from BP. BP is confident that the stake sale at the SVT will not impact its rights to capacity.

As part of the sale agreement, EnQuest has a further option to acquire BP's remaining 75% stake in Magnus oil field, 9% interest in the SVT as well as its stake in the pipeline infrastructure. EnQuest will have to pay $300 million for acquiring these assets. The amount will be paid from a mix of cash in hand and future cash flows from these assets. EnQuest will have the right to exercise this option anytime from July 01, 2018 to January 15, 2019. In the event that EnQuest exercises this option, it will have to pay 50% of all cash outflows from these assets to BP. The cash flows will have an upper limit of $1 billion excluding the sale price of the assets and any adjustments.

Since both Magnus Oil Field and SVT are operational assets and EnQuest will be taking over the operations, employees at both these entities are also expected to transfer to EnQuest. Approximately 100 employees at Magnus and 240 employees at SVT will transition from BP to EnQuest. Employees need not worry as their contractual terms and conditions are covered under the UK Transfer of Undertakings (TUPE) regulations.

EnQuest further has a chance to receive $50 million from BP as fees to manage the physical decommissioning activities for Thistle and Deveron sites.

Benefits for EnQuest

With the acquisition and operatorship, EnQuest will add approximately 15.9 MMboe of net 2P reserves and net production of 4.2 Mboepd. EnQuest enhances its corporate image and emerges as a go-to company for operating maturing assets with significant remaining resource potential. Since it will be acting as an operator, EnQuest be able to direct cash flow improvements and efficiencies in field life extensions. Since the transaction does not call for any immediate capital outflow and is in deferred future payments, EnQuest will have a stable financial position. It has an option of getting an additional $50 million for managing the physical decommissioning activities at Thistle and Deveron sites.

BP's Future plans

With the partial stake sale and transfer of operational responsibility to EnQuest, BP will now be able to concentrate on its projects located west of Shetland - Clair Ridge and Quad204. Both of these assets will add to BP's new oil into production. BP is still invested in the extending the life of the Magnus Oil Field and has invested £670 million in in the ETAP cluster of fields which will extend its life till 2035.

BP also plans to participate in up to five exploration wells over the next 18 months and drilling approximately 50 development wells over the next 3-4 years.

Stock Performance

BP PLC's share price finished yesterday's trading session at $36.91, marginally advancing 0.79%. A total volume of 6.50 million shares exchanged hands, which was higher than the 3 months average volume of 5.65 million shares. The stock has advanced 3.65% and 9.62% in the last three months and past six months, respectively. Furthermore, in the previous twelve months, shares of the Company have surged 35.06%. The stock has a dividend yield of 6.50% and currently has a market cap of $119.37 billion.

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