LONDON—BP PLC said Tuesday it has agreed to sell its Colombian oil and gas exploration and production business to Ecopetrol SA and Talisman Energy Inc. for $1.9 billion.
BP is looking to divest $30 billion in assets over the next 18 months to raise money to cover the cost of the Gulf of Mexico oil spill. BP has already struck a $7 billion deal to sell assets in North America and Egypt to Apache Corp.
"I am delighted with the price we have achieved for these assets," said BP Chief Executive Tony Hayward, who will step down on Oct. 1. "BP has been involved in Colombia for more than 20 years ... but it now makes sense for the assets to go to owners more willing than BP to invest in their future development."
The asset sales will help BP cover the estimated $32 billion cost of the oil spill in the Gulf of Mexico, which pushed the company into a $17.5 billion lost in the second quarter.
Ecopetrol, Colombia's national oil company, will buy 51% of the business and Talisman 49%. They will pay BP a cash deposit of $1.25 billion and the balance when the deal passes regulatory approvals, expected by the end of this year.
"I am really pleased with this deal," said Ecopetrol's Chief Executive Javier Gutierrez. "It fits into our strategic plan perfectly, bringing new reserves, production and potential areas for our exploratory portfolio. It also strengthens our transportation and natural gas business."
BP's Colombia business has interests in five producing fields, four separate pipelines and two offshore exploration blocks, the company said. Net proven reserves total some 60 million barrels of oil equivalent and net production of approximately 25,000 barrels a day.
Most of the producing assets are mature. BP discovered the oil and gas reserves in the Casanare province in the early 1990s. Output there peaked in 1999, when it averaged 434,000 barrels a day. BP's licenses in the eastern Casanare province are scheduled to expire between 2016 and 2020.
"These are tremendous assets that our team knows well," said Talisman President and Chief Executive John Manzoni. Talisman is already partnered with Ecopetrol in several oil licenses in Colombia and Peru.
The agreement doesn't affect BP's Castrol lubricants business and other downstream oil activities in Colombia. Barclays Capital acted as sole advisor to BP on the transaction.
BP has got a "very, very good" price for the assets, said NCB Stockbrokers analyst Peter Hutton. The value of the deal is a surprising $32 a barrel for the resources involved, he said. This bodes well for BP's plans to sell its Argentine unit Pan American Energy, he added. "Neither of these are distressed asset sales," Mr. Hutton said.
BP is in talks with Argentina's Bridas Corp. to sell its 60% stake in Pan American for around $9 billion, a person familiar with the talks said last month.