BP in $7 billion asset sale talks with Plains Exploration: source

NEW YORK, Mon Sep 10, 2012 – BP is in talks to sell some of its Gulf of Mexico oil fields to Plains Exploration & Production Co for roughly $7 billion, a person familiar with the matter said on Sunday, as the U.K. oil firm looks to raise money to pay for damages from the 2010 oil spill.

The amount BP will have to pay in damages for the Deepwater Horizon oil spill – America’s worst ever – is still in dispute. But last month the U.S. Justice Department accused the company of gross negligence and willful misconduct over the spill, a position that could lead to nearly $21 billion in civil damages if a federal judge agrees.

BP said in May that it was looking to sell a number of mature fields in the Gulf of Mexico, including its positions in the Marlin, Horn Mountain, Holstein, Ram Powell, and Diana Hoover fields.

A deal would be transformational for Houston-based independent oil explorer and producer, Plains, which had a market capitalization of $5.2 billion as of Friday. The company already has assets in the Gulf, as well as in California, Texas, Louisiana, and the Gulf of Mexico.

Like many other independent U.S. oil and gas companies, Plains has been working to build up its oil assets, as the price for U.S. natural gas has been in a prolonged slump. It had previously estimated that about 57 to 60 percent of its 2012 production would be oil.

The Wall Street Journal, which earlier reported news of the talks, said a deal could be announced as soon as this week.