BHP Group (LON:BHP) has approved nearly $700 million in funding for the Atlantis oil project in the Gulf of Mexico, the Anglo-Australian miner has said. The move came after project operator BP (LON:BP) approved a major expansion at the oilfield last month.
BHP’s share price has surged in London in today’s session, having gained 1.15 percent to 1,750.66p as of 10:02 GMT. The stock is outperforming the broader UK market, with the benchmark FTSE 100 index currently standing 0.42 percent higher at 7,163.06 points.
BHP approves Atlantis funding
BHP announced in a statement today that it had approved $696 million in funding to develop the Atlantis Phase 3 project in the US Gulf of Mexico, following sanction by the project operator BP. The Anglo-Australian miner holds a 44-percent interest in the project, while BP holds 56 percent.
Atlantis Phase 3, located in the deepwater Gulf of Mexico, approximately 130 miles (208 kilometres) off the coast of Louisiana, is a subsea tie back of eight new production wells. First production is expected in the 2020 calendar year and is estimated to increase output by about 38,000 barrels of oil equivalent per day gross at its peak.
BHP said that it had also okayed $256 million in funding to drill an additional appraisal well and perform further studies in the Trion field in Mexico.
Analysts on blue-chip miner
Goldman Sachs, which is ‘neutral’ on BHP, set a price target of 1,800p on the shares today. According to MarketBeat, the blue-chip group currently has a consensus ‘hold’ rating and an average price target of 1,745.88p.
Earlier this month, JPMorgan Cazenove trimmed its rating on the company, arguing that BHP’s shares looked expensive, having outperformed London-listed peer Rio Tinto (LON:RIO) by 12 percent since January last year.