Hilcorp’s Innovation drilling rig on the North Slope. (Courtesy photo)

BP’s sale of its entire Alaska business to Hilcorp is in jeopardy, The Wall Street Journal reported on Thursday. As oil prices crater, banks are hesitant to finance the $5.6 billion deal, the newspaper says.

It’s the largest deal in the world involving oil and gas production assets that has yet to close, the WSJ reports. It includes BP’s stakes in the massive Prudhoe Bay oil field and the trans-Alaska pipeline.

BP and Hilcorp have said they expect the deal to close this summer.

However, citing people familiar with the deal, the WSJ reports a group of banks led by JP Morgan Chase & Co. have become uncomfortable providing a loan as oil prices collapse in response to the coronavirus pandemic and declining energy demands.

Related: Why does a barrel of Alaska oil cost less than a pizza?

The WSJ also said it reviewed a recording of a call between Hilcorp management and bond investors. Management said whether the deal moves forward or doesn’t, the goal is to stay amicable with BP, the newspaper reported.

Hilcorp spokesman Luke Miller declined to comment Friday on the WSJ report, including whether the deal was at risk and how the company plans to finance it.

In response to questions, BP spokeswoman Megan Baldino said the company isn’t commenting outside of its market update from early April. The update says BP expects the sale to Hilcorp to be completed this year, “subject to regulatory approvals.”

Read the entire article from The Wall Street Journal here.

Last year, BP announced its plans to sell its Alaska assets to Hilcorp.

At that time, Alaska North Slope crude sold for about $60 a barrel. By Friday, it sold for about $25.

Larry Persily, a longtime observer of Alaska’s oil industry, said he’s not surprised to read about banks balking at financing the sale.

“Any banker in the world is going to pick up the phone and say, ‘Hey, Mr. Hilcorp, you got to come in. We got to talk about the terms on this because we’re not feeling as comfortable as we used to feel,'” Persily said.

But, Persily said, BP still wants to exit Alaska, and some of its employees have already left the company. He said he expects BP and Hilcorp to make the deal work — somehow.

“As painful as it may be to change the terms, it would be more painful to unwind the deal and put a for sale sign back up at Prudhoe Bay because there are no other buyers out there,” he said.

The Regulatory Commission of Alaska continues to review a critical piece of the sale. It asked Hilcorp last week to disclose whether and how the historic drop in oil prices will affect its ability to finance the deal. The company must respond by May 4.

Related: Will the oil price crash disrupt the BP-Hilcorp deal? Alaska state regulators want to know.

Reach reporter Tegan Hanlon at thanlon@alaskapublic.org or 907-550-8447.