More than six months later the transition is still underway, though both BP and Hilcorp still expect the sale to be finalized by the end of the second quarter. The Alaska Department of Natural Resources (DNR) continues to perform its due diligence and review all aspects of the transaction, including Hilcorp’s financial assurances and its bonding capabilities.

And in March, the Regulatory Commission of Alaska (RCA) issued an order permitting Hilcorp to keep private the financial statements it is required to produce as part of the sale.

A lot of questions remain about how the change will impact North Slope operations and whether Hilcorp will be able to continue its pattern of infusing new life into aging assets like Prudhoe Bay. Here’s what we know so far.

The sale encompasses 100 percent of BP’s Alaska interests, which includes its midstream and upstream assets (as well as BP Exploration Alaska, which owns the upstream oil and gas interests); BP Pipelines’ interest in the Trans Alaska Pipeline System; and a cluster of Arctic Slope Regional Corporation (ASRC) units located within the Arctic National Wildlife Refuge.

The big question is why, after sixty years in Alaska, the company—which was instrumental in the growth of Prudhoe Bay and the creation of the Trans Alaska Pipeline System—would leave the state entirely. There was the usual finger-pointing at repeated attempts to change the state’s oil tax regime. Damian Bilbao, vice president of commercial ventures for BP in Alaska, told legislators at a joint meeting of the House and Senate Resources committee in February that the potential for oil tax changes did play a part in the company’s decision.

“There is no question that the ongoing oil tax uncertainty influenced the way BP Alaska was evaluated in our portfolio,” he said.

But it wasn’t the only factor. Bilbao said the decision was part of BP’s larger goal of ensuring that the company’s investments continue to align with its corporate priorities and strategies. One of those priorities is making sure that its Lower 48 business interests, which include the 2018 acquisition of assets in West Texas, remain competitive for its growth investment. Rather than increasing the company’s debt to finance the $10 billion acquisition, Bilbao explained, BP chose to sell off some of its assets. The high cost of production in Alaska, the distance of oil to market, and tax risk all put Alaska out of line with BP’s goals.

“Balanced against the uncertainty of our interest and our knowledge of Hilcorp, it made Alaska a solid divestment candidate,” he said.

Founded in 1989 with the goal of becoming the country’s premier independent exploration and production company, Hilcorp’s “success is built on taking over mature legacy assets [and] infusing new capital, energy, and innovation into those and extending the life of those assets,” Senior Vice President of Hilcorp Alaska David Wilkins told legislators in February. Roughly 20 percent of the company’s equivalent gross production of 450,000 barrels of oil per day is from Alaska, he added.

Hilcorp has invested $2.5 billion into Alaska since it arrived in 2012, Wilkins said. In Cook Inlet, its $1.7 billion investment helped Hilcorp increase production, maintain an aging infrastructure, and drill eighty-six new wells. Similar results at Milne Point, which Hilcorp acquired a 50 percent interest in from BP in 2014, makes it well-suited to assume operations in Prudhoe Bay, he said.

“Milne Point has been the hub of most of our activity and it is the shining example of what we’re capable of,” he told legislators. Milne Point was on an 8 percent decline with 90 employees maintaining operations when Hilcorp first came in. Five years later, the company has invested $700 million and houses 300 to 400 employees each night.

“Those are jobs,” Wilkins said. “And what is the $700 million? We’ve drilled sixty wells. We’ve taken production from 18,400 barrels a day and it’s now crossed 34,000 barrels a day. It hasn’t been that high since 2008. By the end of 2020, we’re going to be producing more than 40,000 barrels a day at Milne Point.”

But some have questioned Hilcorp’s readiness to take over such a large project, particularly its financial ability to do so. Those concerns were amplified when Hilcorp asked the RCA to keep its required financial disclosures private; the RCA granted Hilcorp’s request in a 4-1 decision in March, ruling that the financial statements were “confidential as a matter of law.”

In its request, Hilcorp argued that it has “developed a business model that has relied on their competitive advantage of being private, while foregoing many of the advantages their peers enjoy by being public [such as increased access to capital markets]. The trade-off… is what allows [Hilcorp] to be purchasers and operators of late-life, mature fields and assets.”

Wilkins compared the request to closed bidding in real estate transactions.

“I think that there are still a lot of things going on that are, yes, not in the public view in terms of man on the street, but this is not unusual in other deals,” he says. “There are other sectors of the economy, not in the oil patch, that are not publicly-traded companies that have business before the state of Alaska that are not disclosing their financials.”

Bilbao said Hilcorp’s history of improving Alaska’s oil fields was an important factor in BP’s decision to sell to the company and expressed confidence in its ability to successfully operate in Prudhoe Bay.

“Hilcorp certainly doesn’t need any hand holding,” Bilbao told legislators. “They stepped into Cook Inlet, and we went from having shortages in Southcentral to being in a fundamentally different place. They stepped into Milne Point and showed us not just how they could produce more oil but how they could build pads in a different way. We saw them deliver a new pad faster, more efficiently, and more effectively than, frankly, we would have, or than we did, for many years.”

How Hilcorp’s acquisition of BP’s Alaska assets will affect operations in Prudhoe Bay is the $5.6 billion question. The answer is a mix of knowns and unknowns.

“You’ve got multiple owners in the Prudhoe Bay field,” Popp says. “ConocoPhillips and ExxonMobil will continue to maintain their level of ownership in that field once the deal is approved. From an operational point of view, Hilcorp is going to have to meet the expectations of their co-owners. I think that’s not going to change.”

But he says he expects that Hilcorp’s business model, which is different from other North Slope oil companies, will have a ripple effect.

“What is it going to do in terms of the business model for the North Slope? I think it’s going to make some improvements in that there’s going to be new investment brought into an old field [that] has not had the investment we’d have liked to see in bringing on the more marginal lines,” Popp says. “It will hopefully bring new barrels into the system.”

Details on Hilcorp’s exploration and development plans are sparse, which Popp says isn’t unusual at this stage of the process.

“They’re in there right now doing their final due diligence on the final BP assets, then they’re going to recognize there are areas where they want more information that BP wasn’t able to provide,” Popp explains. “It’s going to be a period of time and transition and analysis on their part, which is my speculation. But I don’t think that’s going to be an extended period, because they did not buy this asset just to sit on it.”

Permit applications Hilcorp filed with the Alaska Division of Oil and Gas shed light on their immediate plans. The division approved a proposal to expand its polymer injection facility at F Pad in the Milne Point Unit and to drill six development wells in the Ugnu Reservoir at Milne Point’s S Pad; Hilcorp amended the proposal in January, seeking approval to drill an additional four wells.

“We’re excited about a pad called I Pad at Prudhoe Bay,” Wilkins told legislators. “We’re the first to bring polymer flooding to the Milne Point facility and to the North Slope. Two polymer flood pads are going on at Milne Point, and we’re in the process of expanding two more facilities; that’s going to double the recovery in the heavy oil.”

Uncertainty is part of any transition, and the COVID-19 pandemic, which has drastically reduced the price of oil and caused other oil companies to cut back on their spending, has added another dimension to that uncertainty. But assuming the global oil market settles down after the pandemic has passed, Popp says the sale should be good for Alaska.

“The bottom line is I think that this transaction, in the end, is going to lead to a more robust North Slope for Alaska in terms of barrels produced and jobs,” Popp says. “It’s just not necessarily going to be the same model that we’re used to.”