Few details available as IKAV prepares to take ownership of BP's natural gas assets
A European-based company that has focused largely on solar and wind energy is preparing to take ownership of BP's San Juan Basin natural gas assets
FARMINGTON — Few details are available as closure nears in the sale of BP American Production Co.'s natural gas assets to a renewable energy-focused European company called IKAV.
The purchase of the San Juan Basin assets marks IKAV's entry into the U.S. energy landscape and is one of the largest natural gas sales announced in 2019, according to PJ Solomon, a firm that provides financial and technical advice to IKAV. PJ Solomon announced its involvement in a December "Solomon Says" post on its website.
The sale also marks the continued transformation of the San Juan Basin, which was once one of the leading natural gas basins in the United States. Over the past couple of years, major natural gas companies like BP, ConocoPhillips and BHP have sold their assets to relatively younger companies.
Little known about the buyer's plans
While the identity of the buyer is no secret, IKAV's plans for the assets it is buyign from BP are unknown.
"They've kind of kept things pretty much close to their chest," said Four Corners Economic Development CEO Arvin Trujillo, who keeps a close eye on such matters.
While Trujillo said he and other members of the community are watching the sale and waiting for further information from the two companies, he views the sale as positive news for the San Juan Basin.
He said as BP has been marketing the natural gas assets, the company has held off on developing them. That could change with a new owner.
New Mexico Oil and Gas Association spokesman Robert McEntyre also saw the sale as potentially positive news for the basin.
"Anytime we see assets change hands, it could be an opportunity for additional investment into the basin," McEntyre said.
He said IKAV will likely want to see a return on its investment, which he hopes means securing the jobs that currently exist and possibly adding new jobs.
McEntyre said NMOGA welcomes anyone interested in investing in northwest New Mexico and building the natural gas industry.
However, IKAV has not released much information about its plans.
"A lot of people really don't know much about the company that's coming in," Trujillo said.
He said he was surprised to learn that a European company that has focused on renewable energy was buying the natural gas assets.
Sale to close early this year
According to its website, IKAV manages more than $1.6 billion of renewable and energy efficiency assets, primarily located in Europe. It was founded in 2010 in Hamburg, Germany, where the headquarters remain.
IKAV managing director Bjorn Kahl said the sale is anticipated to close early this year, and BP spokesman Jason Ryan said it should be finalized in the first quarter of this year.
Both Ryan and Kahl said the companies are not disclosing the sale price. Ryan said BP owns approximately 4,000 wells in the San Juan Basin.
“We’ll continue to work those assets up until the closing,” Ryan said.
Kahl said BP and IKAV will work together in the upcoming months to ensure a “safe and seamless transition.” He said IKAV is excited to add the assets to its portfolio.
A 'buy and hold strategy'
“IKAV has a long transactional history with BP starting in 2012 by acquiring BPs renewable portfolio in Europe,” he said via email. “IKAV's funds are evergreen funds with a true Buy and Hold strategy. In fact, IKAV has never sold an investment and we do not intend to do so in the foreseeable future.”
Trujillo said BP, ConocoPhillips and BHP have been a part of the region for decades and invested in San Juan College as well as other parts of the community.
"They've left their footprints here in this area," Trujillo said.
While it is difficult to see the larger companies leave the basin, Trujillo said the newcomers have worked hard to develop the assets they've acquired.
Hannah Grover covers government for The Daily Times. She can be reached at 505-564-4652 or via email at firstname.lastname@example.org.
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