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BP is considering the offloading of some older oil and gas production assets after it bought the shale business of BHP Billiton, the company told Bloomberg in a statement.
The supermajor agreed to buy BHP’s assets in the Eagle Ford, the Permian, and Haynesville in two transactions for a combined US$10.5 billion. Now it plans to sell oil and gas projects across the United States as part of its ongoing US$6-billion asset sale program that should provide it with the funds necessary to buy back some stock.
BP is among the biggest oil and gas producers in the country, with operations spanning across Wyoming, Oklahoma, Colorado, Texas, and New Mexico. It will now focus on the higher-return operations among them, the company said in the statement.
The BHP acquisition was an opportunity for BP to expand its presence in the shale patch, which chief executive Bob Dudley called “transformational”. Indeed, this is the biggest acquisition deal for BP since 1999, when it bought Atlantic Richfield Co. The addition of these assets will increase BP’s oil and gas resources onshore the United States by as much as 57 percent to 12.7 billion barrels of oil equivalent.
BP has been building its presence in the shale patch for a while now and has used cutting-edge tech to improve its cost efficiencies there. Last month, Reuters reported that BP had managed to reduce costs in shale wells by 34 percent over a period of five years. In 2017, the company’s shale business was back in black for the first time as a result of these improvements.
Now, after the BHP acquisition, its shale oil and gas production will increase to more than 500,000 barrels of oil equivalent daily, from about 315,000 boed. In the longer term, BP plans to boost its shale oil production specifically from 10,000 bpd to 200,000 bpd by 2025.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.