BP Plc (BP - Free Report) made plans to divest its share in the Crossfield Gas Storage facility to TransCanada Corporation (TRP - Free Report) . The transaction, scheduled to close by the first quarter of 2013, will fetch C$210 million to the British oil giant.
The deal covers 40% of the interest BP holds in properties of the Crossfield Gas Storage facility as well as stakes in a marketing joint venture entity − CrossAlta Gas Storage & Services Ltd − between BP and Crossfield. The transaction comprises BP's base gas in the facility, all of its mineral interests in the Crossfield area that include ownership interest in the Elkton production unit and associated surface land.
Situated about 50 kilometers (or 31 miles) north of the City of Calgary, the Crossfield facility has a natural gas storage capacity of 68 billion cubic feet. This unit transports gas from West to East Canada, and to California and the Pacific Northwest.
Meanwhile, in a separate release, BP also agreed to sell its liquefied petroleum gas (LPG) distribution business in Poland to UGI Corporation (UGI - Free Report) . However, the companies declined to comment on the financial aspect of the transaction. Last year, this operation distributed over 150 million gallons of LPG to the residential, commercial, autogas, and wholesale segments.
BP remains busy in reshaping its portfolio through the divestment of smaller non-core properties to pay spill-related costs, while holding onto potential big resources. Although this move will likely hurt the company’s performance in the near term, it is expected to benefit the oil giant eventually over the long haul. The company is set to divest around $38 billion worth of assets by 2013.
Recently, BP made its largest ever criminal settlement with the federal authorities regarding the catastrophic 2010 Macondo well oil spill. The agreement with the U.S. government calls for the payment of $4.5 billion by the British oil giant to resolve all criminal charges leveled by the Department of Justice and all claims by the Securities and Exchange Commission. It can now focus on the remaining civil claims as well as on more upstream activities.
BP, UK's second largest oil company by market value after Royal Dutch Shell Plc (RDS.A - Free Report) , carries a Zacks #3 Rank, which is equivalent to a Hold rating for a period of one to three months. We also maintain our long-term Neutral recommendation on the company.