UK supermajor BP is exiting its entire Alaska business, including its interest in the legacy Prudhoe Bay oilfield, as it shifts its US focus to shale and deep-water.

The company has agreed to sell all of its assets in the state to privately held Hilcorp for $5.6 billion.

The deal will make Hilcorp the second-largest producer in the state behind ConocoPhillips. Once the deal closes, Hilcorp and ConocoPhillips will control 72% of Alaskan production, according to consultancy Wood Mackenzie.

More consolidation in the region can be expected, Wood Mackenzie said. "ExxonMobil may be next to follow BP, Anadarko, Pioneer and Marathon in the list of companies having sold out of Alaska," Wood Mackenzie analyst Rowena Gunn said.

BP has been focused on divesting $10 billion in assets this year following its $10.5 billion acquisition of BHP's shale portfolio last year.

Chief executive Bob Dudley said the assets no longer fit with BP's long-term strategy. "We are steadily reshaping BP and today we have other opportunities, both in the US and around the world, that are more closely aligned with our long-term strategy and more competitive for our investment," Dudley said.

The deal is expected to close next year.

Hilcorp will take over as operator of the massive Prudhoe Bay field with a 26% working interest. Production at Prudhoe Bay peaked in 1988 when it produced 1.6 million barrels per day of crude, according to figures from the state, but has been on the decline more recently.

In January, BP estimated 2019 Prudhoe Bay production would average about 270,000 boepd.

"This is an important deal for Alaska as it changes the operator of the flagship Prudhoe Bay field," Gunn said. "Growth is coming westward from ConocoPhillips and Oil Search-operated projects. But all North Slope barrels rely on the infrastructure established at Prudhoe Bay."

The announcement signals an end to BP's decades-long tenure. The supermajor began working there in 1959, and began producing from Prudhoe Bay in 1977. The oilfield, which BP says is the most prolific in US history, has produced about 13 billion barrels of oil to date and may produce more than a billion more.

In addition to Prudhoe Bay, BP holds non-operating interests in the Milne Point and Point Thomson fields, a non-operating interest in the Hilcorp-led Liberty project, and exploration lease interests.

About 1600 employees work for BP's Alaska business and the company said it was "committed to providing clarity about their future as soon as possible".

Hilcorp has been operating in Alaska since 2012 and is the largest private operator in the state.

Hilcorp's pipeline subsidiary, Harvest Midstream, will take over BP's midstream assets in Alaska, including its 49% interest in the 800-mile Trans-Alaska Pipeline System.

"Energy is a cornerstone of the Alaskan economy and this investment will help drive growth in local energy production, jobs and state and local revenue for many years to come," said Jason Rebrook, president of Hilcorp Energy.

"Hilcorp has a proven track record of bringing new life to mature basins, including Alaska's Cook Inlet and the North Slope, and we have a clear understanding that an experienced local workforce is critical to success."

WoodMac's Gunn said continued investment in maintaining Prudhoe Bay will be Hilcorp's focus, but the assets come with an upside.

"A 2019 3D seismic campaign will reveal further targets to prolong the legacy field while the company is also growing Milne Point production and considering a potential final investment decision at the Liberty field (now 100% owned)," she said.

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BP heads for exit door as it sells up in Alaska