BP Says It Made Largest Find In A Quarter-Century Off Brazil
Chief Executive Officer Murray Auchincloss reset BP’s strategy in February by promising to refocus on oil and gas after years of failed low-carbon investments.
BP Plc said it made its biggest discovery in 25 years in deep waters off Brazil, a boon for the UK oil major as it seeks to turn around years of underperformance.
BP found an estimated 500-meter (1,640-foot) column of oil and gas at the Bumerangue block in the Santos basin, it said Monday, giving little other detail. The find adds to other discoveries this year in Trinidad & Tobago, the Gulf of Mexico and Egypt.
“This is another success in what has been an exceptional year so far for our exploration team,” the energy giant said in a statement. “Our ambition is to explore the potential of establishing a material and advantaged production hub” in Brazil.
The shares rose as much as 1.7%, and traded up 1.3% as of 11:01 a.m. in London, outpacing rivals.
Chief Executive Officer Murray Auchincloss reset BP’s strategy in February by promising to refocus on oil and gas after years of failed low-carbon investments. Other supermajors had recommitted more quickly to the hydrocarbon-focused strategies that fed their profits.
“This find may well see BP’s upstream-portfolio longevity extending well into the 2030s/40s,” Irene Himona, an analyst at Bernstein, said in a note. “It is this that has been the biggest issue and concern.”
BP said it’s sticking with its 2030 production target of 2.3 million to 2.5 million barrels of oil equivalent a day, and has “capacity to increase production out to 2035.” The company is working to drive up output after activist investor Elliott Investment Management demanded quicker growth, as well as a slew of divestments and drastic cost cuts.
The shares have dropped about 9% during the past year, and there was a muted response from investors when BP appointed the former boss of a building-materials company as its new chairman last month.
BP said it will conduct laboratory analysis to get a more detailed picture of the Brazilian discovery. Early samples from the reservoir show high levels of carbon dioxide, which could make development complicated and costly.
“Cynics might say that the board are desperate for some positive news after the underwhelming response to the new chairman and increasing pressure from activist Elliott over its cost base,” Ashley Kelty, director of oil and gas research at Panmure Liberum, said in a note on Monday.
