Last week oil and gas major BP Plc was reportedly in the early stages of considering the sale of a substantial 49% stake in its extensive U.S. oil and gas pipeline network situated in the Gulf of Mexico to reduce its debt and maintain shareholder dividends.

Sources familiar with the matter suggest that this potential divestment could yield as much as $1 billion. BP's initiative to offload some of its pipeline assets is part of its financial strategy to strengthen its fiscal position.

Despite boosting its shareholder payouts by 10% during its second-quarter earnings announcement in August, BP continues grappling with significant net debt, currently at $23.7 billion.

The sources revealed that BP intends to establish a new entity to manage these U.S. Gulf of Mexico pipelines, in which it will retain a 51% ownership stake and seek to divest the remaining 49%. The pipelines, which are a critical component of BP's operations, generate an impressive $200 million in earnings before interest, tax, depreciation, and amortization over a 12-month period.

BP, one of the leading producers of oil and natural gas in the U.S. Gulf of Mexico, has ambitious plans to increase its daily production in the region to approximately 400,000 barrels of oil equivalent per day by the middle of this decade, as indicated on its website. The company currently operates five offshore platforms, with the most recent addition, Argos, commencing operations in April.

The Gulf of Mexico pipeline network in question includes stakes in several key pipelines, such as the 161-mile Mars Oil Pipeline, the 89-mile Endymion Oil Pipeline, and the 115-mile Cleopatra Gas Pipeline, all of which are detailed on the company's website.

This prospective sale of a pipeline stake aligns with BP's previous efforts to divest from U.S. assets. In 2021, BP initiated a venture focused on infrastructure for transporting refined products, with investment firm Sixth Street Partners acquiring a 49% stake for approximately $700 million. Recent reports from Bloomberg News indicate that Sixth Street Partners made an additional investment of $400 million in the venture last month.

The timing of these financial maneuvers comes as BP undergoes a leadership transition following the resignation of former Chief Executive Bernard Looney last month, citing undisclosed personal relationships with employees. BP is currently engaged in a search for its new leader.

It's essential to note that these deliberations are preliminary, and no definitive agreement has been reached, with BP declining to provide any comments or confirm these developments.