BP reports second-quarter 2017 exploration highlights

HOUSTON -- BP has reported that it continues to make progress in shifting its exploration portfolio toward natural gas and advantaged oil.

As first described to the financial community in 2016, BP is actively reviewing its exploration activities and refocusing them on growth in natural gas and advantaged oil in regions where BP currently operates. It is also selectively looking for opportunities to grow new material production regions, while exiting less competitive exploration prospects.

Bernard Looney, BP’s Upstream chief executive commented: “We are making disciplined choices throughout our business, including in exploration, and pursuing only opportunities that will deliver clear value for our shareholders.
Equally important to this disciplined, value-over-volume strategy, we are choosing not to pursue activities that we don’t think will deliver maximum value for our shareholders.”

Portfolio review

As part of the ongoing portfolio evaluation, BP has decided to relinquish its 50% interest in Block 24/11 offshore southern Angola. Katambi, a gas discovery made in the block in 2014, has not been determined to be commercial. As a result of this and other exploration write-offs in Angola, BP expects to include in its second quarter 2017 results a non-cash exploration write-off in Angola of around $750 million, which will not attract tax relief. This will not impact cash flow as part of re-balancing BP.

In October 2016 BP announced that it would not continue frontier exploration in the four blocks it operated in the Great Australian Bight, offshore southern Australia. BP and partner Statoil have now signed a swap agreement where Statoil has taken full ownership and operatorship of two of the blocks. BP is proceeding to discuss with the Australian government exiting its blocks. This is not anticipated to impact second quarter 2017 results.

BP continues to thoroughly review its existing portfolio of exploration assets, moving forward with the most attractive and exiting those that do not compete.

Discoveries

BP has announced four gas discoveries so far in 2017.

The Savannah and Macadamia gas discoveries in Trinidad, announced earlier in June, together are expected to unlock around 2 Tcf of gas in place and to support further development in BP’s long-standing business in Trinidad. The Qattameya discovery in Egypt, announced in March, was the third gas discovery on the North Damietta Offshore concession, where BP is already developing the Atoll field.

Following the completion of its entry into Senegal, in May BP and partner Kosmos Energy announced a major gas discovery with the Yakaar-1 exploration well, which further confirms offshore Mauritania and Senegal as a world class hydrocarbon basin.  The partners plan a drill stem test at the Tortue Field and a further three exploration wells over the next 12 months.

Access

BP has also continued to seek and access attractive new exploration acreage and opportunities globally. Building on incumbent positions, BP has been awarded new licences in the US Gulf of Mexico and in the UK North Sea. The 25 blocks awarded as a result of the UK’s 29th Offshore Licensing Round represent the largest acreage award for BP in the North Sea since the late 1990s.

In support of selectively looking for new material production regions, earlier in 2017 BP was awarded exploration licences in Newfoundland, off the east coast of Canada, and in Mexico. Further to the deal announced between BP and Kosmos Energy in December 2016, BP deepened its position in Senegal agreeing to purchase a further 30% interest in two offshore blocks.

Howard Leach, BP’s head of exploration commented: “This combination of new discoveries and new access has given BP a strong, resilient and more diversified exploration portfolio that lays the foundation for future growth in some of the world’s most exciting hydrocarbon basins.”