BP Plc is in talks with U.S. energy company Apache Corp and others to sell assets worth up to $10 billion as it grapples with the cost of the worst oil spill in U.S. history.
BP shares surged more than 9 percent in London and nearly 8 percent in New York on Monday, driven by the potential asset sales and hopes for a new system to capture almost all of the spewing oil that has fouled coastlines and hurt tourism and fisheries in five states along the Gulf of Mexico.
It's probably worth more than what it's trading for right now if they can ever get this well capped and get the cleanup effort really going, said Ted Parrish, a co-portfolio manager at Henssler Equity Fund in Georgia.
Interior Secretary Ken Salazar is expected to issue a more flexible six-month moratorium on deepwater oil drilling by 4 p.m. EDT (2000 GMT) after a U.S. appeals court last week struck down the Obama administration's original freeze.
The White House is confident the new moratorium will stand up in court, spokesman Robert Gibbs said. Fear of new rules and regulations has already led many drillers to stop exploring for oil in the Gulf of Mexico.
President Barack Obama is under heavy pressure to balance making offshore drilling safer and holding BP accountable while protecting thousands of jobs associated with the industry. The disaster now sits atop his domestic agenda and has complicated the close ties between the United States and Britain.
BP is talking to Apache and others about potential asset sales, including stakes in the British energy giant's Alaskan oil fields, said a source familiar with the situation.
BP owns a 26 percent stake in Alaska's Prudhoe Bay, the largest oilfield in North America and one of the 20 largest ever discovered.
The asset sale talks are at an exploratory stage and it was not certain whether any plans would be advanced enough to be disclosed before BP announces second quarter earnings later this month, the source said.
BP and Apache declined to comment on the reports.
The talks come as scrutiny of BP ramps up with Obama's independent oil spill commission holding its first public hearings in New Orleans on Monday and Tuesday.
The panel of seven engineers, environmentalists and former politicians will investigate decisions by oil companies and government regulators that may have led to the disaster.
Former U.S. Senator Bob Graham, the panel's co-chair, said it was possible the commission could make recommendations in less than six months on the future of deepwater drilling.
NEW CAP SYSTEM VERY CLOSE
BP, whose shares have fallen about 40 percent since an explosion on its Deepwater Horizon rig on April 20 unleashed the oil into the Gulf of Mexico, is under enormous pressure to halt the leak.
It expects to attach a new containment system later on Monday that could capture up to 80,000 barrels of oil per day (3.4 million gallons/12.7 million liters), more than triple current levels of about 25,000 barrels.
We have the cap very close and later today we'll be attaching it, Doug Suttles, BP's chief operating officer, told reporters. It could take well through the day to complete.
BP, which said the cost of the spill was now about $3.5 billion, expects its first relief well to reach the blown-out well late this month -- a first step in finally plugging the gusher by the first half of August as planned.
As several previous attempts to contain the oil have failed, BP is preparing a backup if the relief wells do not succeed. BP said it could install a new permanent oil-capture system by late August or early September.
Part of the recovery in BP shares, which had lost $100 billion in market capitalization at one stage, is due to speculation the company is approaching sovereign wealth funds for cash to ward off a takeover and to help pay for the spill.
BP Chief Executive Tony Hayward met an Abu Dhabi state investment fund last week.
(Additional reporting by Raji Menon in London, Kristen Hays in Houston, Alexandria Sage in New Orleans, Jeff Mason in Washington, Matthew Lynley and Matt Daily in New York; Writing by Timothy Gardner, Editing by John O'Callaghan)