By Shariq Khan, David French and Ron Bousso
(Reuters) - BP (LON:BP) Plc is exploring the sale of a 49% stake in its U.S. oil and gas pipeline network in the Gulf of Mexico, hoping to raise as much as $1 billion, according to people familiar with the matter.
The potential divestment would help BP meet its targets to reduce debt and maintain its dividend. While it boosted its shareholder payout by 10% in second-quarter earnings in August, BP's net debt stood at $23.7 billion.
BP has placed its stakes in U.S. Gulf of Mexico pipelines in a new company in which it will hold a 51% position and sell the rest, the sources said.
The pipelines entity generates 12-month earnings before interest, tax, depreciation and amortization of around $200 million, the sources added.
The sources cautioned no deal is certain and requested anonymity because the matter is confidential. BP declined to comment.
One of the largest producers of oil and natural gas in the U.S. Gulf of Mexico, BP is expected to produce around 400,000 barrels of oil equivalent per day from the region by the middle of this decade, per its website. It has five offshore platforms, with the fifth - Argos - commencing operations in April.
Among the pipelines in which BP holds stakes are the 161-mile Mars Oil Pipeline, the 89-mile Endymion Oil Pipeline and the 115-mile Cleopatra Gas Pipeline, according to its website.
This would not be the first time that BP, which is in the midst of a leadership search after former Chief Executive Bernard Looney resigned last month over undisclosed personal relationships with employees, sells a stake in U.S. assets.
In 2021, it set up a venture for infrastructure transporting refined products in which investment firm Sixth Street Partners acquired a 49% stake for around $700 million. Sixth Street invested a further $400 million last month, Bloomberg News reported.