BP Gulf of Mexico Find Caps Best Exploration Year in Decade
Gila, co-owned with ConocoPhillips, was found in the Paleogene trend, the same layer of rock as the Kaskida discovery in 2006 and Tiber in 2009. The well was drilled under 4,900 feet (1,500 meters) of water about 300 miles (480 kilometers) southwest of New Orleans. More drilling will be needed to determine the size of the Gila find, BP said.
Chief Executive Officer Bob Dudley pledged to focus more on exploration to help return the company to growth following the 2010 Gulf of Mexico oil spill. Gila is the seventh discovery from 15 exploration wells completed this year and follows potentially commercial finds in India, Egypt, Angola and Brazil.
“Exploration is at the heart of BP’s upstream strategy,” Lamar McKay, head of its exploration and production arm, said in a statement. “The successes and opportunities now being delivered through our increased exploration activity confirm our confidence in our ability to sustain BP’s resource base.”
The shares were little changed in London, closing at 464.9 pence. It’s up 2.9 percent since the company’s third-quarter earnings beat analyst estimates on Oct. 29 and it unexpectedly raised the dividend.
BP said it will have to write off $230 million of costs from the unsuccessful Pitanga well in Brazil. It will also write off $850 million of the value of the license the well was drilled in, acquired from Devon Energy Corp. (DVN) in 2010.
Petroleo Brasileiro SA (PETR3), known as Petrobras, said yesterday it discovered oil in the Pitu prospect in Brazil, 40 percent of which belongs to BP. In Angola, BP partner Cobalt International Energy Inc. (CIE) said earlier this month that it successfully tested crude flow rates at the Lontra prospect, which is below layers of salt and mirrors the geology off Brazil.
The Gila well in the U.S. Gulf of Mexico was drilled to 29,000 feet, or more than 5 miles deep. BP has stepped up drilling in the Gulf this year after a moratorium on new wells following the spill slowed down activity for years. The company has more rigs operating in the region than in its whole history.
Tiber, the discovery close to Gila in 2009, has at least 1 billion barrels of recoverable resources and was the biggest find in the region in a decade.
Dudley sold off more than $60 billion of assets following the Deepwater Horizon accident in 2010 and said the company would focus on its most profitable fields. In October, he promised a further $10 billion of sales by the end of 2015.
BP still faces billions of dollars in fines following a court case over the spill. Two parts of a three-phase trial in New Orleans over blame for the accident and the size of the penalty have been completed, though no ruling has been issued.
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