Apache Corp. on Friday was working on financing to secure a deal to buy some of BP plc’s Alaska properties, and an announcement was expected as soon as Sunday or Monday, a source familiar with the discussions told NGI.

BP’s work to secure the massive oil leak in the deepwater Gulf of Mexico (GOM) appeared to be inching toward a successful conclusion Friday (see related story). However, with the hit to its stock price and its reputation, the London-based major is said to want to deliver positive news to shareholders when quarterly results are announced on July 27.

BP and Apache spokespeople declined to comment on possible transactions. CNBC and other media outlets also reported Friday that financing plans were under way for Apache to secure some assets.

Two things are needed to make a transaction by Apache possible, a source told NGI. Apache has to be able to fund the deal; it is completing a cash-and-stock takeover of Mariner Energy Inc. worth close to $3 billion, and it recently completed a $1.05 billion deal to buy Devon Energy Corp.’s offshore assets delete this cite (see NGI, April 19).

Several sources said Apache was looking for a bridge loan of up to $7 billion. Apache also would have to clear the rights of first refusal with any of BP’s operating partners in Alaska, which would have to be approved before any transaction moved forward.

“The hope had been that a deal could be announced as soon as this Monday,” reported CNBC’s David Faber, “but given the need to give certain partners of BP in these properties their right of first refusal, it is proving somewhat complex.”

On Friday Tudor, Pickering, Holt & Co. Inc. (TPH) noted that the media was “all over [a] possible transaction,” with a deal to be announced by Monday. TPH reported that Apache was to pay $10-11 billion for a “subset of BP’s North Slope assets,” which “fits perfectly” in Apache’s “wheelhouse…buying large/mature fields and squeezing incremental value.”

It’s unlikely that BP would sell its entire Alaska portfolio for $10 billion, which would imply half of the recent book value, the TPH team noted. BP’s recent filings indicate that the exploration and production (E&P) business in Alaska generated $3 billion in earnings last year; its estimated book value of the Alaska E&P assets was $31 billion, including $12 billion of fixed assets.

BP has operated in North America for 50 years and now is part owner (26%) of the biggest oilfield in the United States at Prudhoe Bay, AK. ExxonMobil and ConocoPhillips also hold stakes in the venture. BP operates 15 North Slope oilfields (including Prudhoe Bay, Endicott, Northstar and Milne Point), and four North Slope pipelines. It also owns a stake in six other producing fields and in the Trans Alaska Pipeline System (TAPS), which carries oil supplies to the Lower 48.

In Alaska’s Beaufort Sea BP recently slowed plans to develop the Liberty reservoir, where it plans to drill some of the world’s longest wells — two miles deep and up to eight miles from the drilling base at Endicott, AK.

Whether potential sales may involve BP’s natural gas businesses is unknown. BP earlier this month relinquished its title as the largest gas producer in the United States to ExxonMobil, which completed its takeover of XTO Energy Inc.

Apache has a history of doing big transactions, and its biggest ever was with BP. Seven years ago Apache paid BP $1.3 billion to acquire a suite of properties that included 61 producing fields in the GOM (see NGI, Jan. 20, 2003).

Rumors also continue that ExxonMobil — or some other major — would be interested in buying BP assets or even the entire company, but officials had no comment.

UK’s Financial Times (FT) noted that some analysts are betting on an ExxonMobil bid — or by some cash-heavy producer. “BP’s headed for a date with destiny” on July 27, and, “The risks involved in such a huge deal, while BP faces as-yet unknown liabilities, would make a bid an uncharacteristic gamble for Exxon, but if BP continues to flounder, it could appear an attractive option.”

Even though the companies have refused to comment, “it is no doubt a major step for BP following the its suspension of its dividend and trimming of capital spending,” wrote Zacks Equity Research.

“BP could use some cash and they are persona non grata in the U.S. for the foreseeable future after the Macondo debacle, so why shouldn’t they sell Alaska and bring in some coin to enhance their liquidity/flexibility?,” asked the TPH analysts. “Sort of like the job that you quit before you are fired…feels better if you have some control in the process.”

Apache historically has bought mature properties from the oil majors and “enhanced them with more operational focus and more cost control,” noted TPH. The producer has resisted “shalemania,” except in the Horn River play of British Columbia, and it’s “waited in the weeds for the past several years for acquisition opportunities. All these factoids combine to say this type deal has to be at least lukewarm.”

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