BP Leaves Big Shoes to Fill: Hilcorp's purchase of BP assets marks significant milestone.

• Author: Newman, Amy

Last summer, rumors were swirling that oil giant BP planned to sell its Alaska interests and end its presence in the state. It wasn't the first time industry watchers had speculated that BP's future in Alaska was drawing to a close.

But it ultimately turned out to be the last.

BP officially put rumors of its exit to rest in August when it announced the $5.6 billion sale of all of its Alaska interests to Hilcorp, the privately owned, Texas-based oil and gas company that first entered the Alaska market in 2012.

At the time, BP's then-Group Chief Executive Bob Dudley called Hilcorp "a highly-capable operator" whose extensive experience in Alaska made it "ideally-placed to take this important business on into the future, continuing to optimize its performance and maximize its value for the State of Alaska."

More than six months later the transition is still underway, though both BP and Hilcorp still expect the sale to be finalized by the end of the second quarter. The Alaska Department of Natural Resources (DNR) continues to perform its due diligence and review all aspects of the transaction, including Hilcorp's financial assurances and its bonding capabilities.

And in March, the Regulatory Commission of Alaska (RCA) issued an order permitting Hilcorp to keep private the financial statements it is required to produce as part of the sale.

A lot of questions remain about how the change will impact North Slope operations and whether Hilcorp will be able to continue its pattern of infusing new life into aging assets like Prudhoe Bay. Here's what we know so far.

What's at Stake--and Why

The sale encompasses 100 percent of BP's Alaska interests, which includes its midstream and upstream assets (as well as BP Exploration Alaska, which owns the upstream oil and gas interests); BP Pipelines' interest in the Trans Alaska Pipeline System; and a cluster of Arctic Slope Regional Corporation (ASRC) units located within the Arctic National Wildlife Refuge.

The sale will give Hilcorp a 26 percent working interest in Prudhoe Bay alongside ConocoPhillips and ExxonMobil, a 32 percent interest in the Point Thomson Unit, and a 50 percent interest in the ASRC leases.

But while BP is transferring 100 percent of its Alaska interests to Hilcorp, DNR Commissioner Corri Feige said what BP isn't transferring as part of the sale is important.

"BP is not transferring 100 percent of anything, because it doesn't hold a 100 percent working interest ownership in any of these...