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5 Energy Deals Not to be Forgotten in 2012

Stocks in this article: BP KMI SEMG MRO KWK DVN CHK

2. BP Shops its Pan American Energy Stake

In November, British oil giant BP saw a $7.1 billion deal to sell a majority 60% stake in an Argentinean oil venture called Pan American Energy for $7.1 billion fall through when its partners Bridas of Argentina and CNOOC (CEO) of China objected to negotiations. The move was a hit to BP, which in October announced it would raise $45 billion through divestitures by 2013.

Currently, BP is contesting its Gulf of Mexico oil spill liability with Halliburton (HAL), which is the contractor that provided cementing on the Macondo well piping. Earlier in January, BP argued in New Orleans court that Halliburton should be held liable for spill related costs, which Bloomberg reports have already hit $21 billion and could reach the $40 billion that BP has provisioned for.

After CNOOC and Bridas walked away from BP's Pan American sale, the company indicated in a statement that it would be "happy to return to long-term ownership" of the assets after its finances improved. In November, BP said that its sale program is focused on eliminating "non-strategic assets and not driven by a requirement to raise cash."

Nevertheless, BP returned quickly to the deals table, plugging its M&A spill. In December, BP sold its natural gas liquids business in Canada to Plains All American Pipeline (PAA) for $1.67 billion.

Depending on the outcome of the Halliburton litigation, spill-related costs and oil prices, BP may or may not be eager to reach its recently announced $45 billion divestiture mark.

Since June 2010, BP has announced over $17.5 billion in assets, with just over $10 billion in sales coming from oil exploration and production assets, according to data compiled by Bloomberg as of December -- less than 40% of its divestiture goal.

1. El Paso Asset Spins or Sales

In October, Kinder Morgan purchased El Paso in the largest deal of 2011 that valued the company at $38 billion and quashing a previous plan by El Paso to spin its oil exploration and production assets. In May, El Paso unveiled a spin of its exploration business, which contains valuable Haynesville and Eagle Ford shale assets in an IPO that would create a standalone company valued at $4.7 billion.

After Kinder Morgan stalled those IPO plans, the exploration asset sales are still expected. When announcing the merger, Kinder Morgan said it will fund the hefty price in part by selling El Paso's exploration assets, according to Chief Executive Richard Kinder.

For Kinder Morgan, the deal was part of an effort to bolster its already giant pipeline operations, targeting the transport of the oil and gas coming from the shale boom currently underway in New York, Louisiana, Texas, North Dakota, Pennsylvania and Ohio among other regions. With El Paso, Kinder Morgan would become the largest independent natural gas and petroleum transporter in the U.S.

Currently, the deal is being contested in Delaware courts by some El Paso shareholders who object to the takeover in favor of the previously announced asset spin. If the merger were to be approved in 2012, the next question is whether Kinder Morgan would spin El Paso's exploration assets in an IPO or look for an outright buyer.

-- Written by Antoine Gara in New York

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