PXP to buy U.S. Gulf assets from BP for $5.55 billion

(Reuters) - Plains Exploration & Production Co is buying BP Plc's stake in some deepwater Gulf of Mexico wells for $5.55 billion as part of a plan to boost crude oil production, the company said on Monday.

The move helps BP shed smaller, older assets to focus on larger, newer wells that are more lucrative. It also helps BP reach its goal of raising $38 billion through asset sales to pay for damages from the 2010 oil spill in the Gulf of Mexico.

Plains Exploration, better known by the PXP stock exchange symbol, will roughly double its size and broaden its exposure to crude oil production with the acquisition, as natural gas prices slump.

PXP, whose shares fell more than 4 percent in premarket trading after the deal was announced, is buying London-based BP's 100 percent stake in the Marlin, Dorado and King and Horn Mountain fields. It said it would also pay $560 million to acquire the remaining 50 percent working interest in the Holstein Field from Royal Dutch Shell Plc .

PXP will also get BP's 33.33 percent working interest in the Diana-Hoover Field, which is operated by ExxonMobil Corp , and BP's 31 percent stake in the Ram Powell field, which is operated by Shell Offshore Inc.

TPH Energy Research said the $5.55 billion price tag was $700 million higher than it had thought the assets were worth and that the deal was good news for BP.

"A reduced and more-focused exposure to the Gulf of Mexico is welcome for BP, we think, in the midst of recently escalated" legal action by the U.S. government against the company for the spill, TPH said in a research note.

The properties that Houston-based PXP is acquiring were producing an estimated 59,500 barrels of oil equivalent net per day at the end of July.

Given PXP's $5.2 billion market cap, the deal roughly doubles the company in size. The company is paying for the BP assets with debt and is not issuing new stock, which is good news for existing shareholders.

PXP sold natural gas assets in Texas for $785 million last November.

The deal follows a Reuters report on Sunday that said BP was in talks to sell some of its Gulf of Mexico oil fields to PXP. The report cited a person familiar with the matter.

Shares of PXP fell 4.5 percent to $38.52 in premarket trading. In London, BP rose 0.6 percent to 437.5 pence.

(Reporting by Ernest Scheyder in New York and Swetha Gopinath in Bangalore; Editing by Sriraj Kalluvila and Lisa Von Ahn)

Source: http://news.yahoo.com/pxp-buys-u-gulf-assets-bp-5-55-111441088--finance.html

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