17 March 2000
BP Amoco and Atlantic Richfield Co (ARCO) announced that they have agreed to sell ARCO's Alaskan businesses to Phillips Petroleum Co of Bartlesville, Oklahoma for $7 billion.
The sale, which is subject to completion of the ARCO combination, is intended to address antitrust concerns of the US Federal Trade Commission (FTC). BP Amoco is currently in negotiation with the FTC to obtain a consent order for the combination of BP Amoco and ARCO. BP Amoco and ARCO have agreed jointly with the FTC, the US West Coast states and Alaska to suspend litigation, originally scheduled to begin in California on March 20, pending the outcome of those negotiations.
The proposed $26.8 billion combination of BP Amoco and ARCO was announced in April, 1999 and was subsequently approved by the European Union and shareholders of both companies. An agreement was also reached with the State of Alaska, as well as with the California Governor. The proposed merger, however, was opposed by the FTC which had antitrust concerns over the Alaska businesses. Earlier this year, BP Amoco and ARCO announced their intention to pursue this issue in court.
The sale to Phillips of all ARCO's Alaskan businesses includes its interest in the Prudhoe Bay oil rim, interest in the greater Kuparuk area, a stake in the Alpine field, 1.1 million net exploration acres, interest in the Trans-Alaska pipeline, and ARCO's crude oil shipping fleet. The $7 billion price for the Alaskan businesses is made up of approximately $6.5 billion for the field, pipeline and shipping operations and assets, plus a supplemental payment of $500 million accruing as the WTI crude price exceeds $25 a barrel, retroactive to January 1. There will also be a payment of some $150 million for crude oil inventories.