BP Plc (BP) announced that it has found traces of gas at its Itaipu-2 pre-salt appraisal well in Brazil’s deepwater Campos basin. The company has reported to the Brazilian National Petroleum Agency about the potential discovery.
The Itaipu-2 well, located in block BM-C-32 about 130 kilometers off Brazil, was drilled to a total depth of 4877 meters in 1420 meters of water. Itaipu-2 delineates the discovery made in 2009 in Itaipu-1 wildcat, nearly 7 kilometers to the northwest.
BP has encountered elevated gas, gas wetness and fluorescence while drilling the well. However, to validate the find, the company is conducting further logging operations ongoing that will have to be integrated into the overall interpretation. The focus in the next piece of critical appraisal work at Itaipu will be on recovering a high-quality fluid sample and calculating how much the reservoir can produce.
Earlier in 2009, Devon Energy Corporation (DVN) held the block when the discovery of Itaipu-1 was announced. BP acquired the interest from Devon Energy and became the operator of Block BM-C-32 with a 40% interest. Anadarko Petroleum Corporation (APC) holds a 33.3% interest while the remaining 26.7% is held by Maersk Oil.
Following the oil spill, BP is striving to improve its revenue flow. Thus, exploration success will be the key for the company to deliver strong future growth and re-establish its position. Further, BP remains focused on a string of upstream activities while disposing of much of its lowest return refining business in the U.S. We look forward to a marked recovery, as well as consolidation to reduce operational risk or oil spill-related assignments.
BP holds a Zacks #3 Rank, which is equivalent to a Hold rating for a period of one to three months. For the long term, we maintain a Neutral rating on the stock.
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