BP in talks to sell assets as spill costs mount

NEW ORLEANS/NEW YORK (Reuters) - BP Plc is in talks with U.S. oil and gas company Apache Corp and others to sell assets worth up to $10 billion as it grapples with the costs of its spill in the Gulf of Mexico.

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.

"The political rhetoric is not as negative as it once was and that allows people to focus on all the value that lies within BP," said Kurt Wulff, president at McDep LLC, an energy investment research company in Needham, Massachusetts.

The British energy giant is in talks with Apache and others about potential asset sales, including stakes in its Alaskan oil fields, said a source familiar with the situation.

The 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 asset sale talks come as scrutiny of BP ramps up with President Barack Obama's independent 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 worst oil spill in U.S. history.

Bob Graham, the panel's co-chair, said on Monday it was possible the commission could make recommendations in less than six months on the deepwater drilling moratorium that the Obama administration has sought to enforce after the disaster.

Interior Secretary Ken Salazar is expected to issue a more flexible moratorium in coming days after a U.S. appeals court last week refused to halt 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 a media briefing. "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.

Obama is also under pressure to show his administration can resolve the spill and hold BP accountable. The disaster now sits atop his domestic agenda and has complicated the close ties between the United States and Britain.

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, Alexandria Sage in Louisiana, Kristen Hays in Houston, and Matthew Lynley in New York; Writing by Sitaraman Shankar and Timothy Gardner, Editing by John O'Callaghan)