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BP deal to sell South America stake collapses

BP deal to sell South America stake collapses
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First Published: Sun, Nov 06 2011. 11 33 PM IST

By Bloomberg
By Bloomberg
Updated: Sun, Nov 06 2011. 11 33 PM IST
Hong Kong/London: BP Plc’s plan to sell a stake in its South American unit for $7 billion has collapsed, potentially trimming the oil major’s cash flow and making it harder to raise its payout to shareholders.
By Bloomberg
China’s biggest offshore oil producer CNOOC Ltd on Sunday said its 50%-owned unit Bridas Energy Holdings has terminated a deal to buy BP’s stake in Argentina-based oil and gas group Pan American Energy Llc (PAE).
BP hinted at its third-quarter results last month that it would announce an increase in its dividend in early 2012.
However, the failure of the sale of its 60% interest in PAE could mean cashflow is lower than might have been expected, making it harder to raise the dividend.
At the results, BP said the deal, initially signed last November, was not as important to the firm’s cashflow today as it was a year ago.
“We reached that agreement last year at a time when oil prices were lower. It was a time when we actually needed to make some divestments of properties. We’re past that point. We don’t actually need to make that divestment... If it doesn’t happen, it’s absolutely fine,” BP chief executive Bob Dudley told analysts at the time.
BP in a statement on Sunday said it will repay a deposit of $3.5 billion received for the PAE stake at the end of 2010, which would not impact its level of gearing.
BP’s planned sale of the stake was intended to help raise funds to pay for the cleanup of its Gulf of Mexico oil spill in 2010.
BP had been waiting on regulatory approval for the deal to proceed.
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First Published: Sun, Nov 06 2011. 11 33 PM IST
More Topics: BP | South America | Plant | Oil | Corporate News |