BP beats asset sales target with time to spare: Deals in the US and Sweden overtake company's 12-month goal but more disposals remain in the pipeline

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The Independent Online
BRITISH PETROLEUM, the oil and chemicals giant, yesterday broke through its target to raise dollars 2bn from asset sales this year with a flurry of deals totalling about dollars 650m.

The company, which has been struggling to reduce a huge debt mountain with disposals, is selling Purina Mills, America's largest animal feeds business, for dollars 425m to Sterling Group, the US leveraged buyout specialist.

In a separate move BP has disposed of its Swedish petrol retailing business to Statoil, the Norwegian state- owned company, for an undisclosed sum that industry sources estimated at dollars 150m.

The Swedish sale involves 240 petrol stations and a 20 per cent stake in a distribution company but does not affect BP's aviation, lubricants and chemical interests in that country. The two deals take the total amount raised from asset sales to about dollars 2.1bn, comfortably beating the group's target with six months to spare.

Earlier this year BP made several big disposals, including its consumer products division for dollars 375m, a food business for dollars 124m and a 49 per cent stake in Olympic Dam, the vast Australian gold and copper mining venture, for about dollars 240m.

BP also said yesterday that it planned to reduce its interest in three oil and gas exploration projects in Papua New Guinea in separate deals with Exxon, the world's biggest oil group, and Oil Search.

Exxon has the option to take a share in the Hides 3 exploration well in the Southern Highlands in return for assuming the full cost of drilling the well.

It is also entitled to acquire BP's entire 21 per cent stake in an exploration area adjoining the Kutubu oil project by drilling two further exploration wells.

Purina, based in St Louis, Missouri, operates 54 mills with total staff of 2,600. Annual turnover amounted to dollars 936m last year.

Its disposal, which will not be finalised until the autumn, is part of BP's strategy to pull out of the nutrition business to concentrate on core activities in oil exploration and refining and petrochemicals.

The move takes the total sum raised from BP's nutrition arm to dollars 1bn, representing about two-thirds of the division's overall interests.

Another six nutrition businesses - including a big European animal feeds company and a fish food and farming concern - are on the block with a combined capital employed of about dollars 400m.

Although it is not clear when they will go, all six are understood to be profitable.

Proceeds from the disposals are expected to be used to pay down BP's estimated pounds 9.5bn net debt, equivalent to about 90 per cent of its net assets.

The disposals were well received in the City yesterday. Jeremy Hudson, oil analyst with Lehman Brothers, said: 'BP have obtained a good price for their Swedish assets.'

He added: 'A few months ago there was a great deal of scepticism about BP's ability to achieve the disposal target, but the company has come through with flying colours.'

However, the company's shares eased back 2p to 311.5p in a sluggish equity market. Last June they hit a low of 180p after Robert Horton was ousted as BP's chairman and chief executive in a boardroom coup sparked by a personality clash with fellow directors.

The group reported a pounds 1bn loss last year, but is expected by analysts to return to a pounds 1bn net profit this year.

World oil consumption in 1992 grew by just 0.5 per cent or around 500,000 barrels per day, according to an authoritative statistical review of world energy published by BP.

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