BP share price: company wants to sell part of Australian Bight stake

BP Plc (LON:BP) is looking to lower its exposure to substantial drilling costs in the promising exploration region of the Great Australian Bight, the company’s vice president of exploration for Asia Pacific Bryan Ritchie said in a speech at the Australian Petroleum Production & Exploration Association conference yesterday.

BP’s share price had edged 0.42 percent to 454.20p as of 08:05 BST today, outperforming the FTSE 100 blue chip benchmark which had gained about 0.2 percent. BP’s stock has gained more than 10 percent year-to-date.
The British oil major will look to consolidate at a 40 or 50 percent stake in its exploration lease in the Bight, down from 70. The remaining 30 percent stake is currently held by Norwegian state oil firm Statoil.
Exploration costs for BP’s lease are projected at well over $1 billion, with operational expenses estimated to reach as much as $600 million. However, BP has also commissioned a new rig for the project, which is being built in South Korea at a cost of $755 million.
Exploration is scheduled to start in October 2016, with four wells planned to be drilled.
“We’ve had a number of companies speaking to us, and hopefully some of the companies will see the potential we see,” Ritchie said. “There’s a big opportunity there.”
The Great Australian Bight, widely tipped as one of the world’s more promising unexplored oil provinces, is believed to hold billions of barrels of oil. Indicative of the potential the area holds for the industry, BP confirmed that despite slashed exploration budgets across all sectors, it remains committed to the Bight.
However, the company is facing mounting opposition from environmentalists who are wary of the BP’s safety record, particularly in light of the Deepwater Horizon 2010 incident. The oil major was found to have been “grossly negligent” with regard to the oil spill, with total costs stemming from the incident estimated to reach as much as $42 billion.
As of 09:06 BST, Tuesday, 19 May, BP plc share price is 453.25p.