BP PLC (NYSE: BP) has confirmed some news reported earlier by Reuters on an update of its planned asset sales. BP is selling its interests in a number of oil and gas fields in the deepwater U.S. Gulf of Mexico to Plains Exploration & Production Company (NYSE: PXP) for a total of $5.55 billion. Today’s move is part of a previously announced plan to divest up to $38 billion in assets and position its Gulf portfolio for long-term growth from the years 2010 to 2013. BP has now entered into agreements to sell assets with a value of over $32 billion since the beginning of 2010.

The asset sale includes its interests in three BP-operated assets: the Marlin hub, composed of the Marlin, Dorado and King fields (BP working interest 100 percent); Horn Mountain (BP, 100 percent) and Holstein (BP, 50 percent). The deal also includes BP’s stake in two nonoperated assets: Ram Powell (BP, 31 percent) and Diana Hoover (BP, 33.33 percent). BP announced its intention to sell these nonstrategic assets in May 2012. BP said that it plans to concentrate future activity and investment in the Gulf on growth opportunities around its four major operated production hubs and three nonoperated production hubs in the deepwater, and on significant exploration and appraisal opportunities in the Paleogene and elsewhere.

The oil giant went on to say that these assets no longer fit its business strategy, but it said that the Gulf of Mexico remains a key part of BP’s global exploration and production portfolio. BP still intends to continue investing at least $4 billion in the Gulf annually over the next decade.

Under the terms of the agreement, Plains will pay BP a total of $5.55 billion in cash for the assets, subject to regulatory approvals, certain preemption rights and customary post-closing adjustments. The parties anticipate the deal closing by the end of 2012. Shares of BP traded in New York are indicated up about 0.75% at $42.24 in premarket trading, but shares are up about 1.1% in London trading.

JON C. OGG

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