BP today announced it has agreed to sell its interests in a number of oil and gas fields in the deepwater US Gulf of Mexico to Plains Exploration and Production Company (‘Plains’) for a total of $5.55 billion, as part of a previously-announced plan to divest the assets and position its Gulf portfolio for long-term growth.
BP is selling its interests in three BP-operated assets: the Marlin hub, comprised of the Marlin, Dorado and King fields (BP working interest 100 per cent); Horn Mountain (BP, 100 per cent) and Holstein (BP, 50 per cent). The deal also includes BP’s stake in two non-operated assets: Ram Powell (BP, 31 per cent) and Diana Hoover (BP, 33.33 per cent). BP announced its intention to sell these non-strategic assets in May 2012.
The divestment is in line with BP’s global strategy of playing to its strengths, including the development of giant fields and deepwater exploration. It also reflects a greater focus in the Gulf of Mexico on producing more high-margin barrels from fewer, larger assets.
BP will concentrate future activity and investment in the Gulf on growth opportunities around its four major operated production hubs and three non-operated production hubs in the deepwater, as well as on significant exploration and appraisal opportunities in the Paleogene and elsewhere.
“While these assets no longer fit our business strategy, the Gulf of Mexico remains a key part of BP’s global exploration and production portfolio and we intend to continue investing at least $4 billion there annually over the next decade,” said Bob Dudley, BP group chief executive.
“This sale, as with previous divestments, is consistent with our strategy of playing to our strengths as a company and positioning us for long-term growth. In the Gulf of Mexico that means focusing future investments on our strong set of producing assets and promising exploration prospects.”
Under the terms of the agreement, Plains will pay BP a total of $5.55 billion in cash for the assets, subject to regulatory approvals, certain pre-emption rights and customary post-closing adjustments. The parties anticipate the deal closing by the end of 2012.
BP expects to divest assets with a total value of $38 billion between 2010 and 2013 as it focuses its business around the world on its strengths and opportunities for growth. With today’s agreement, BP has now entered into agreements to sell assets with a value of over $32 billion since the beginning of 2010.
“This deal further demonstrates the value we have been able to unlock through the targeted divestment of high-quality assets that sit outside the heart of our strategy,” added Dudley.
On completion of the transaction, BP will continue to operate four large production platforms in the region – Thunder Horse, Atlantis, Mad Dog and Na Kika – which produce from some of the largest deepwater oil and gas fields ever discovered and each of which has a long production profile and future development programme. BP will also continue to hold interests in three non-operated hubs – Mars, Ursa and Great White.
BP currently anticipates investing on average at least $4 billion in the Gulf of Mexico each year for the next decade. In June this year, production started from the BP-operated Galapagos project – tied back to the Na Kika platform — and a further development of Na Kika is expected to come on stream in 2013. BP is also progressing plans for a second phase of the Mad Dog field. BP now has six drilling rigs operating in the Gulf of Mexico and expects to have eight rigs in place by the end of the year, the most it has ever had in the region.
BP has been exploring in the deepwater Gulf for more than a quarter of a century and is the leading acreage holder, holding more than 700 leases, with a strong position in the emerging Paleogene play, including appraisal projects such as Kaskida and Tiber. BP acquired 43 new leases in the deepwater Gulf in the June 2012 lease sale, which will be awarded subject to regulatory review.
- Report: BP near $6 billion sale of Gulf assets to Plains (fuelfix.com)
Yesterday BP announced that on June 3, 2012 it began the initial start-up of the Galapagos development in the deepwater U.S. Gulf of Mexico, one of a series of new major upstream projects that the company expects to bring into production this year.
“The start-up of this project in the Gulf of Mexico is one of BP’s key operational milestones for 2012, one of six high-margin projects we expect to come on stream this year,” said Bob Dudley, BP group chief executive. “I expect that the operational progress we are now making will deliver increasing financial momentum for BP as we move into 2013 and 2014.”
The Galapagos development includes three deepwater fields and increases the capability of a key offshore production hub for BP. The fields – Isabela, Santiago and Santa Cruz – are being produced using subsea equipment on the floor of the Gulf. A new production flowline loop has been added to carry output to the nearby Na Kika host facility, a BP-operated platform located roughly 140 miles southeast of New Orleans in 6,500 feet of water.
The Na Kika facility, with a production capacity of 130,000 barrels of oil equivalent per day, has been modified to handle output from the three fields. Full ramp-up of the project is expected around the end of June.
“The Galapagos development marks another significant step forward for BP in the Gulf of Mexico, and reflects the potential we continue to see in this world-class basin, now and in the future,” said James Dupree, Regional President of BP’s U.S. Gulf of Mexico business.
BP’s overall interest in the three-block area that includes the fields comprising the Galapagos project is about 56 per cent. Noble Energy, Inc., Red Willow Offshore, LLC, and Houston Energy, L.P., are co-owners. BP is the operator of the Isabela field, while Noble Energy operates the Santiago and Santa Cruz fields.
The Galapagos development required the installation of new subsea infrastructure, production risers, topsides as well as other modifications.
BP expects to invest at least $4 billion a year on oil and gas development in the Gulf of Mexico over the next 10 years, following its strategy of focusing investment and future growth around the company’s strengths, including deepwater exploration and development.
“BP’s continuing investment in the Gulf of Mexico is yet another example of our commitment to the U.S. economy and energy security,” Dudley added. “This investment, along with our ongoing commitment to the Gulf Coast region, demonstrates the importance of the U.S. to BP’s long term strategy.”
BP announced today that the Brazilian National Petroleum Agency (ANP) has approved its farm-in to four deepwater exploration and production concessions operated by Petróleo Brasileiro S.A. (Petrobras) in the Brazilian equatorial margin.
BP Energy do Brasil Ltda. is taking a 40 per cent interest in each of the blocks, located in the Barreirinhas and Ceará basins, from Petrobras.
The move will give BP access to four new concession blocks in Brazil: BM-BAR-3 and BM-BAR-5 in the Barreirinhas basin, and BM-CE-1 and BM-CE-2 in the Ceará basin. Together the blocks cover a total area of 2,113 square kilometres.
“BP is building on our strengths in exploration and the deepwater and these four new blocks bring exciting new exploration opportunities, adding to the already significant position we hold in Brazil,” said Bob Dudley, BP group chief executive. “I am pleased that this also deepens our strong relationship with Petrobras, one of the world’s leading deepwater operators.”
Guillermo Quintero, BP Brazil President added: “Over the past year, in addition to acquiring ten upstream concessions from Devon Energy in May, we have made major investments in biofuels and expanded our aviation business in Brazil. I am delighted with this continued growth of our presence in Brazil.”
Following the farm-in, BP will hold concessions in 14 blocks in Brazil, operating six. BP will be a partner with Petrobras in nine of these concession areas: the Xerelete field, BM-C-34 and BM-C-35 (in the Campos basin); BT-PN-2 and BT-PN-3 (in the Parnaíba basin); BM-BAR-3 and BM-BAR-5 (in the Barreirinhas basin) and BM-CE-1 and BM-CE-2 (in Ceará basin).
- Petrobras Discovers Oil at Tucura Well, Campos Basin, Offshore Brazil (mb50.wordpress.com)
- BP Gains Access to 5 More Deepwater Blocks Off Angola (mb50.wordpress.com)
- Brazil: Petrobras Agrees Contracts for 26 Drilling Rigs (mb50.wordpress.com)
- BP Hires PSV ‘Sea Brasil’ (mb50.wordpress.com)
- Petrobras: Production Starts at Cascade Field (USA) (mb50.wordpress.com)
Governor Sean Parnell met yesterday in Anchorage with the chief executive officers from BP, ConocoPhillips and Exxon Mobil to discuss alignment between the three companies on commercializing the North Slope’s vast natural gas reserves.
The meeting took place at the request of Governor Parnell after he publicly called on the three companies – the major lease holders for gas reserves on the North Slope – to work together on developing a liquefied natural gas (LNG) project that focuses on exporting Alaska North Slope gas to Asia’s growing markets.
“We had a productive discussion about how to get alignment between the companies and grow Alaska’s economy through oil and gas development,” Governor Parnell said. “I made it clear that we want to see progress on commercializing Alaska’s gas for Alaskans and markets beyond.”
The Parnell administration is targeting LNG exports to Asia given increasing demand there.
Governor Parnell and the CEOs – Bob Dudley of BP, Jim Mulva of ConocoPhillips and Rex Tillerson of Exxon Mobil – met for two hours. During the meeting, the CEOs briefed the governor on the extensive work they’ve been doing in response to his request.
“I appreciate the willingness of the chief executives to come to Alaska to discuss the important topic of commercializing North Slope gas,” Governor Parnell said. “For a gas project to advance, all three companies need to be aligned behind it. This meeting is an important step, but much work remains.”
- BP, ConocoPhillips JV Drops Alaska Gas Pipeline Project
- GVEA, Flint Hills Resources Alaska Sign MOU on LNG Project (USA)
- Alaska Governor Backs LNG Plan
- Alaska Delegation Supports ConocoPhillips Kenai LNG Permit Extension
- Alaska LNG Terminal Exported One Cargo in November
- Alaska discusses laternatives to TransCanada pipeline (business.financialpost.com)
- Oil executives meet with Alaska gov. on pipeline (seattletimes.nwsource.com)
- Alaska export plan collapses (mb50.wordpress.com)
- ExxonMobil Eyes North American LNG Exports (mb50.wordpress.com)
- USA: Seventeen LNG Cargoes Re-Exported in Jan-Nov (mb50.wordpress.com)
- Angola LNG Looks to Sell Liquefied Natural Gas to Non-U.S. Buyers (mb50.wordpress.com)
- Alaska governor revamps gas pipeline pitch (seattletimes.nwsource.com)
BP’s involvement with Angola goes back to the mid 1970s. During the 1990s, BP made very substantial investments in Angola’s offshore oil, and it is now an important part of the company’s upstream portfolio. The UK based oil giant today confirmed that it has gained access to five more deepwater exploration and production blocks offshore Angola.
These give BP a leading position in Angola, with interests in nine blocks accounting for a total acreage of 32,650 square kilometres (km2).
In a ceremony today in Luanda, in the presence of state oil company Sonangol’s president Manuel Vincente and BP group chief executive Bob Dudley, the production sharing agreements were signed for four new blocks covering 19,400 km2 in the Kwanza and Benguela basins.
Separately, BP has recently taken a 40% stake in the 4,840 km2 Block 26 in the Benguela basin, by agreeing a farm-in deal with Brazilian national oil company, Petrobras, which operates the block.
“In October, we told the markets we would build on our strengths in exploration and in the deepwater to provide future growth for BP. This new access builds on the major presence we have developed in Angola over the past 10 years, investing a total of $21 billion in the business. We plan to double our global spend on exploration and this huge new acreage gives us more great opportunities. We look forward to working with Sonangol in the Kwanza and Benguela basins,” said Bob Dudley. “The last 14 months have been our most successful for a decade in gaining new access for exploration – with 69 new exploration licences in 11 countries.”
BP was awarded operatorship of Blocks 19 and 24 with 50% interest, and additional non-operating interests in Blocks 20 (20%) and 25 (15%). With Block 26, the five new blocks cover a total area of 24,000 km2 in water depths from 200 to 2500 metres, and increase BP’s total Angolan acreage by 275%.
- Angola LNG Looks to Sell Liquefied Natural Gas to Non-U.S. Buyers (mb50.wordpress.com)
- Angola: Oil Ministry Says US Will be Main Market for LNG Export (mb50.wordpress.com)
- USA: BP Sells Stake in Pompano and Mica Offshore Fields to Stone Energy (mb50.wordpress.com)
- USA: BP Confirms Significant Resource Extension for Mad Dog Complex (mb50.wordpress.com)