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BP Inks Deal to Divest Forties Pipeline System to INEOS

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BP plc (BP - Free Report) recently inked an agreement with INEOS to divest its Forties Pipeline System (“FPS”) business. The assets to be sold include the main Forties offshore and onshore pipelines as well as related pipeline interests and facilities.

Per the terms of the agreement, BP will receive about $250 million from INEOS, including a cash payment worth approximately $125 million.

On completion of the transaction – subject to partner, regulatory and other third party approvals – the operatorship of the FPS assets and business will be transferred to INEOS. The sale, however, will not impact BP’s existing rights to capacity in FPS.

The U.K.’s first major offshore oil field, the Forties pipeline, was opened in 1975 to carry oil from the Forties field. The pipeline, which is built, owned and operated by BP, currently transfers liquids production from about 85 fields in the Central and Northern North Sea and several Norwegian fields on behalf of about 40 companies.

The system has a capacity to transfer 575,000 barrels of oil a day. In 2003, BP farmed out its interests in the Forties field to Apache Corporation (APA) and sold the Grangemouth refinery and chemical plants to INEOS in 2005.

Investors should note that the operatorship of FPS is expected to be transferred to INEOS as a fully operational entity along with those staff who operate and support the various components of the related businesses. Their contractual terms and conditions are protected under the U.K.’s Transfer of Undertakings (Protection of Employment) regulations (TUPE).

Currently, about 300 BP staff are engaged in operating and supporting the FPS business at Kinneil, Falkirk, Dalmeny, Aberdeen and offshore. BP will now commence consultation with in-scope staff for both the unionised and non-unionised populations.

Subject to the receipt of regulatory and other third party approvals, BP intends to conclude the sale and transfer of operatorship during 2017.

Investor confidence on the BP stock is reflected in its price chart. Shares of the company appreciated 16.3% in the last one year, while the Zacks categorized Oil & Gas – International Integrated industry gained 9.9% in the same time span.



Currently, BP carries a Zacks Rank #3 (Hold). Some better-ranked players in the same space include Energy Transfer Equity, L.P. , Crescent Point Energy Corp. (CPG - Free Report) and Cenovus Energy Inc. (CVE - Free Report) . All these stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Energy Transfer Equity posted a negative earnings surprise of 16.00% in the preceding quarter. It had an average negative earnings surprise of 9.62% in the four trailing quarters.

Crescent Point Energy posted a positive earnings surprise of 244.44% in the preceding quarter. It beat estimates in all the four trailing quarters with an average positive earnings surprise of 127.16%.

Cenovus Energy posted a positive earnings surprise of 583.33% in the preceding quarter. It beat estimates in two of the four trailing quarters with an average positive earnings surprise of 74.89%.

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