With the latest addition of two drilling rigs, oil major BP plc’s (BP) fleet in the deepwater Gulf of Mexico (GoM) now comprises an impressive nine rigs. Given the importance of the U.S. offshore basin, BP intends to develop a strong portfolio of assets in the region, going forward.
One of the two rigs is an ultra-deepwater drillship named West Auriga, which has been leased to BP on a long-term basis by Seadrill Ltd (SDRL), a leading international offshore drilling contractor. The vessel is competent to function in about 12,000 feet of water. It has also commenced development drilling work at BP’s Thunder Horse field.
The other is a reconstructed drilling rig committed to operate on BP’s Mad Dog oil and gas production platform. The new rig is a replacement of the previous one that was damaged by Hurricane Ike in 2008. Recently, the platform restarted development drilling at the massive Mad Dog field complex with the new, state-of-the art rig.
BP plans to invest about $4 billion annually in GoM for the next 10 years. The company’s operations and investment in the region will center on its four major operated production hubs – Thunder Horse, Na Kika, Atlantis and Mad Dog – and three non-operated production hubs – Mars, Ursa and Great White – in the deepwater. The company also plans to make considerable exploration and exploit appraisal opportunities in the Paleogene and other areas.
Further, BP is making progress with regard to a large pipeline of future development projects in the deepwater GoM. The company began the Atlantis North expansion in April, the first of seven additional wells that will be tied back to the existing Atlantis platform.
Another field expansion is planned at Na Kika, subsequent to the successful commencement of the Galapagos development last year. Notably, the Galapagos development is a subsea tieback to the Na Kika production facility. A second phase of the Mad Dog field is also being planned by BP.
BP currently carries a Zacks Rank #4 (Sell). However, better-placed stocks in the same sector include SM Energy Company (SM) and Abraxas Petroleum Corp. (AXAS). Both these carry a Zacks Rank #1 (Strong Buy).
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