It’s the end of an era for Alaska.

BP will sell its Alaska assets to Hilcorp Energy, a Houston-based major independent, for $5.6 billion, the company announced Tuesday. The transaction, which has been rumored for weeks, includes BP’s upstream and midstream assets including its share of the Prudhoe Bay oil field and the Trans Alaska Pipeline System.

In a press release, BP said the deal also includes BP’s share of the Point Thomson gas and condensate field east of Prudhoe Bay and its shares of the producing Milne Point and Liberty, an offshore field still under consideration.

BP has about 1600 employees in Alaska.

The company’s interests in the Arctic National Wildlife Refuge, mainly exploration data and lease rights on a private inholding, are also included.

Under the terms of the agreement, Hilcorp will pay BP a total consideration of $5.6 billion, comprising $4.0 billion payable near-term and $1.6 billion through an earnout thereafter. Subject to state and federal regulatory approval, the transaction is expected to be completed in 2020. The deal forms a significant part of BP’s plan to divest $10 billion of assets over 2019 and 2020, the press release said.

“As a highly-capable operator with extensive Alaskan experience, Hilcorp is 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”, BP group chief executive Bob Dudley said.

“We are committed to a safe and smooth transition of operations so that our employees, partners and local, state and federal government officials all feel that we have handed over these important assets in the right way,” Dudley said.

“Alaska has been instrumental in BP’s growth and success for well over half a century and our work there has helped shape the careers of many throughout the company. We are extraordinarily proud of the world-class business we have built, working alongside our partners and the State of Alaska, and the significant contributions it has made to Alaska’s economy and America’s energy security,” he said.

“However, we are steadily reshaping BP and today we have other opportunities, both in the U.S. and around the world, that are more closely aligned with our long-term strategy and more competitive for our investment. This transaction also underpins our two-year $10 billion divestment program, further strengthening our balance sheet and enabling us to pursue new advantaged opportunities for BP’s portfolio within our disciplined financial framework,” Dudley said.

BP spokesperson Meg Baldino said the agreement calls for Hilcorp to become operator of the Prudhoe Bay field but that BP will remain in charge until the transaction closes, which will require state and federal approvals. “At that time Hilcorp will come in to assess operations and make decisions,” she said.

Politicians spoke up on the matter, too, including Senate Majority Leader Tom Begich who said in a press release, “While the relationship has sometimes been contentious, the partnership with BP in Alaska has been critical to the growth of our state. We look forward to a good working relationship with Hilcorp and continued collaboration with the industry. Together we can move forward towards a sustainable budget, a strong infrastructure that supports economic growth, and provides educational opportunities and safe environments that will continue to attract and retain business in Alaska.”

House Minority Leader Lance Pruitt (R-Anchorage) also chimed in, saying,

“We were excited to learn today of the sale of BP Alaska to Hilcorp. We are confident that Hilcorp’s expanded presence and reputation for efficiency will be hugely beneficial as we continue to responsibly leverage our natural resources. We also want to thank BP for decades of investment in our state, our people, and our economy.”

“Even with this great news, the departure of one of the world’s largest oil and gas companies should cause us all to be concerned that renewed conversations on oil tax changes are causing great anxiety among producers. Tens of thousands of jobs are at stake. We must remain focused on cutting expenses and not trying to tax our way to prosperity as a state.”

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