BP has decided to exit its 50% interest in Block 24/11 offshore southern Angola after concluding that its 2014 Katambi gas discovery there is not commercial.
Due to the exit from Block 24/11 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. This will not impact cash flow as part of re-balancing BP, the company said.
The decision comes as part of BP’s ongoing review of its exploration activities to refocus them on oil and gas growth opportunities in regions where the company currently operates, BP said in a 29 June statement on its exploration highlights.
“We are making disciplined choices throughout our business, including in exploration, and pursuing only opportunities that will deliver clear value for our shareholders,” said BP Upstream Chief Executive Bernard Looney in the statement. “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.”
These choices include BP’s October 2016 decision not to 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. BP does not expect the decision to impact second quarter 2017 results.
BP continues to add assets to its existing positions the U.S. Gulf of Mexico and UK North Sea, with the 25 blocks awarded to BP in the UK’s 29thOffshore Licensing Round representing the largest acreage award for the company in the North Sea since the late 1990s.
At the same time, BP is still “selectively looking” for opportunities to grow new material production regions. These opportunities include exploration licenses in Newfoundland offshore eastern Canada and in Mexico that BP was awarded this year. BP also has expanded its position in Senegal after agreeing to purchase additional 30% interest in two offshore blocks.
So far this year, BP has announced four gas discoveries. The Savannah and Macadamia gas discoveries in Trinidad, announced earlier this month, together are expected to unlock around 2Tcf 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, BP said.
In February, the company unveiled plans to deliver growth throughout its businesses over the next five years, which the company has based on a US$55/bbl oil price. The projected growth is estimated to generate $13-$14 billion of pre-tax cash flow by 2021. The projection includes the company’s 24 major projects that began production over the past five years.