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BP Amoco Exits Oil Production to Focus on Gas

BP Amoco Exits Oil Production to Focus on Gas

In less than two months, BP Amoco Canada has succeeded in unloading all of its crude oil producing properties in Canada in an effort to lower costs and focus on natural gas, gas liquids and petrochemicals. The company sold the high-cost heavy oil operations to Canadian Natural Resources and Penn West Petroleum for C$1.6 billion. The assets include five major fields, which currently produce a total of 54,300 b/d of oil and liquids and 75 MMcf/d of gas. About 250 employees will be affected by the sale, but many are expected to sign on with the two buyers, said Dan Kane, spokesman for BP Amoco Canada.

"We're basically just pruning our assets to grow. It's just basically fine tuning what we have," he said. "The heavy oil assets just didn't fit in BP Amoco's worldwide portfolio. They are good properties as you can see by the quickness of the sale. We just announced we were selling them in June." There will be a few more niche sales, he added, but the company plans to remain "big on gas."

"We're the largest producer in Canada with more than 1 Bcf/d. But we're also going to focus on liquids and petrochemicals. We're going to concentrate on lowering our costs so we can be a profitable business."

Canadian Natural is buying the Bonnyville thermal heavy oil assets, the Wabasca conventional heavy oil and the Nipisi conventional oil and gas assets for C$1.06 billion. Current production from those assets is 42,000 barrels per day of oil and liquids and 18 MMcf/d of gas. Penn West will be acquiring the Drayton Valley conventional oil and gas field and the Hoosier conventional heavy oil and gas field for C$540 million the Drayton Valley and Hoosier assets which are currently producing 12,300 b/d of oil and liquids and 57 MMcf/d of gas. The effective date of the sales is Aug. 1 and closing is expected to occur on Oct 1.

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