BP's Sale of Pan American Energy Stake Falls Apart

[joyceduybwj]

BP‘s plan to sell its majority stake in the Argentinian oil producer Pan American Energy for 7.1 billion collapsed on Sunday as the would-be buyer, the Bridas <a href="http://www.cheapuggsforsaleonline.net"><strong>uggs</strong></a> Corporation, backed out.But the British oil giant said that the deal’s collapse should have little significant effect on its financial health.Bridas Corp., a joint venture between Bridas Energy of Argentina and Cnooc of China, said in a statement that it had withdrawn its offer to buy BP’s 60 percent stake in Pan American because “certain conditions precedent to the completion of the deal were not obtained as expected.” Bridas currently owns 40 percent of Pan American, one of Argentina’s biggest oil producers.Among those conditions was obtaining approvals from Chinese and Argentinian regulators, which hadn’t been received by a Nov. 1 deadline. Under the terms of the deal agreement, either BP or Bridas Corp. was free to terminate the sale anytime after that.Bridas Corp. officially informed BP of its intentions in a fax sent late Saturday night, according to David Nicholas, a BP spokesman. BP will refund a 3.5 billion deposit paid by Bridas Corp., which is not expected to have an effect on the British company’s finances.The collapse of the deal followed an attempt by BP to sell off assets to help pay for the cleanup of the Gulf of Mexico oil spill. Even after the sale’s termination, BP has still reached agreements to sell about 19 billion worth of assets, and it intends to sell 45 billion worth by the end of 2013.But BP said that completing the Pan American deal was much less important now. Its finances had improved since the deal was announced almost exactly a year ago.“Our financial situation now is very different now,” Mr. Nicholas said. “We have a much strengthened balance sheet.”In a conference call with analysts two weeks ago, BP’s chief executive, Robert Dudley said that his company did not actually need to complete the deal, though it was working to do so.“I do think that that deal will eventually get its approvals and agreements will be reached, but if it doesn't happen, it's absolutely fine,” he said on the call.Both BP and Bridas Corp. said in statements that they intend to continue running Pan American as they have in the past.BP said that it has also paid Bridas Corp. 700 million to settle prior claims between the two partners and to terminate covenants that would have allowed Pan American to participate in BP operations in the bottom of South America. Here’s BP’s full statement:STATEMENT REGARDING SALE OF BP'S INTEREST IN PAN-AMERICAN ENERGY TO BRIDAS CORPORATIONOn 5 <a href="http://www.cheapuggsonsaleuk4u.co.uk"><strong>cheap uggs uk</strong></a> November 2011, BP received from Bridas Corporation a notice of termination of the agreement for their purchase of BP’s 60 per cent interest in Pan American Energy LLC (PAE). As a result of Bridas Corporation's decision and action, the share purchase agreement governing this transaction, originally agreed on 28 November 2010, has been terminated.The closing of this transaction had been delayed because the Argentine anti-trust and Chinese regulatory approvals required to satisfy the conditions precedent to closing of the transaction had not been obtained by Bridas Corporation. Under the terms of the agreement, Bridas Corporation had exclusive responsibility for obtaining these approvals.As a result of Bridas Corporation's termination of the agreement, BP will now repay the deposit for the transaction of 3.53 billion received at the end of 2010. This deposit had been held by BP as short-term debt and will be repaid by 14 November 2011. This repayment will not affect BP’s level of gearing, which stood at 19 per cent at the end of September.PAE is a strong business. As a result of Bridas Corporation’s decision to terminate, BP is no longer in discussions with them regarding this transaction. BP is happy to return to long-term ownership of these valuable assets, given the considerable improvement in its own financial strength and circumstances, as well as the improved external trading environment.In November 2010 and under different circumstances from those at present, BP agreed the sale of its interest in PAE as an early element of its divestment programme to strengthen its balance sheet. Since June 2010, excluding the PAE assets, BP has agreed asset sales totalling over 19 billion. As reported in its third quarter 2011 results, at the end of September 2011, BP held 18 billion in cash.In October 2011, BP announced that it intended to extend its divestment programme to 45 billion by the end of 2013. BP's current divestment programme is focussed on the sale of non-strategic assets and not driven by a requirement to raise cash. As such, BP does not currently plan to divest additional assets to offset proceeds which would have been received from the PAE transaction.Notes to Editors:On 28 November 2010, BP announced that it had reached agreement to sell its interests in Pan American Energy LLC to Bridas Corporation for 7.06 billion in cash. PAE is an Argentina-based oil and gas company owned by BP (60%) and Bridas (40%). The transaction excluded the shares of PAE E&P Bolivia Ltd.BP’s investment in PAE has been classified as assets held for sale in the BP group balance sheet at 30 September 2011.After 1 November 2011, pursuant to the terms of the sale and purchase agreement, if all of the conditions precedent were not yet satisfied, each party had the right to terminate the agreement at any time without notice.As at 6 November 2011, Argentine anti-trust and Chinese regulatory approvals required to satisfy key conditions precedent to complete the sale had not been obtained by Bridas Corporation, nor had Bridas Corporation waived these conditions precedent, as it was entitled to do under the sale and purchase agreement.BP will separately <a href="http://www.uggsclearancesalestores.com"><strong>uggs</strong></a> make a payment of 700 million to Bridas Corporation in full settlement of any and all past claims between the two companies and also as consideration for amendments to the PAE Limited Liability Company agreement which terminate certain legacy restrictive covenants among BP, PAE and Bridas Corporation.