BP Plc (BP/), the third-largest European energy producer by market value, will form a separate business to manage its onshore oil and natural gas assets in the continental U.S.
While BP will continue to own the unit, the new organization will operate with its own management team at a different Houston office and will have separate financials starting in 2015, the London-based company said in a statement today. The unit has the equivalent of 7.6 billion barrels of oil across 5.5 million acres and a stake in more than 21,000 wells.
“With a rapidly evolving environment, our business has become less competitive,” Chief Executive Officer Bob Dudley said at the company’s investor day today in London. “We intend to run business in the lower-48 to compete more effectively with independents” and have shorter decision times.
The world’s largest oil companies have struggled to profit from the boom in production from U.S. shale fields. Royal Dutch Shell Plc said Jan. 30 it will restructure its shale operations in North America after writing down billions of dollars from the value of the assets. Occidental Petroleum Corp. announced plans last month to spin off its California unit to create more focused businesses.
The Occidental announcement is one of several spinoffs as U.S. energy companies seek to streamline operations. ConocoPhillips and Marathon Oil Corp. split off their refining units in the past three years and Hess Corp. is in the process of selling and shutting businesses to become an independent exploration and production company.
Independents, unlike integrated oil companies like BP, don’t own refineries.
Separating the non-Alaskan onshore U.S. business from the rest of BP frees those discoveries from having to compete with discoveries in other parts of the world for financial and personnel resources. BP’s U.S. assets include holdings in Oklahoma’s Woodford, the Fayetteville in Arkansas and the Eagle Ford and Haynesville in Texas, according to its website. The company also has more than 2,000 miles (3,200 kilometers) of pipelines.
The proportion of BP’s sales from the U.S. has been declining since 2009, dropping to 33 percent last year from 35 percent.
“Our overriding goal is to build a stronger, more competitive and sustainable business that we expect will be a key component of BP’s portfolio for years to come,” Lamar McKay, CEO of BP’s upstream business, said in the statement.
Shell and Total SA have the largest market values among European oil and gas producers.
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