Oil and gas producers Santos and Repsol are exploring a sale of a minority stake in oilfields in Alaska they jointly own and develop in a deal that could be worth about $1 billion, according to people familiar with the matter.
The oilfields include the Pikka project, which is one of the
largest oil prospects in Alaska and has been valued at about $4.5 billion by
consultancy firm Rystad Energy.
The companies are working with an investment bank to jointly
sell minority stakes in Pikka, alongside partial interests in the Horseshoe and
Quokka fields that are located in the North Slope region of Alaska, the sources
said, requesting anonymity as the discussions are confidential.
Repsol and Santos declined to comment.
The stakes are so-called non-operating positions, meaning
the owner gets a share of the proceeds from the sale of hydrocarbons without
needing to undertake any drilling or be involved in operations. They are
required to contribute to their share of costs.
Potential buyer interest will likely be impacted by factors
including legal and environmental risks, the sources said, cautioning a deal is
not guaranteed.
There are outstanding legal actions related to access to
roads in an oilfield neighboring Pikka that is owned by a unit of
ConocoPhillips, the largest operator in the North Slope.
North Slope projects have also faced heavy opposition from
indigenous residents and conservation groups, who sought to block Conoco’s
Willow project without success.
“In terms of a potential buyer (for Pikka), it would be very
challenging to attract a buyer other than ConocoPhillips as of now,” said Atul
Raina, vice president of upstream M&A analysis at Rystad. Other large
operators in the region are focused on assets that are already developed and
producing oil, Raina added.
Conoco had previously held talks to buy a 15% stake in Pikka
when it was controlled by Oil Search, an Australian energy firm that was
acquired by Santos for $6 billion in 2021.
Those initial talks ended because Oil Search refused to give
up its operator rights. It is not clear if Conoco would be interested in the
stakes in the Alaska oilfields that are currently for sale.
Conoco declined to comment.
The Pikka project initially struggled to get off the ground,
due to the technical challenges of operating in Alaska and was eventually
greenlit in 2022. Santos said last month that it remained on track to get the
field under production in 2026.
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