BP share price: Mexico approves offshore drilling plan

BP share price: Mexico approves offshore drilling plan

Mexico’s oil regulator has approved a $97-million plan for drilling in an offshore area operated by BP (LON:BP) in the southern Gulf of Mexico, Reuters has reported. The update comes after the blue-chip oil major recently announced new production units in the Gulf,  enhancing its status as the area’s biggest producer.

BP’s share price has been steady in London this morning, having climbed 0.42 percent higher to 553.30p as of 09:06 BST. The stock is outperforming the broader UK market, with the benchmark FTSE 100 index currently standing 0.1 percent lower at 7,415.37 points. The group’s shares have given up about one percent of their value over the past year, largely in line with the Footsie.

Mexico approves drilling plan

Reuters reported this morning that Mexico’s national hydrocarbons commission (CNH) had approved a $97-million plan for drilling in an offshore area operated by BP. The four-year exploration plan covers a 700,000 square kilometre shallow water block, located north of the coast of Tabasco state. BP won the rights to drill last June, along with its partner, France’s Total.

Reuters further noted that BP’s contract was one of over 100 awarded since a sweeping energy reform was finalised in 2014, under Mexico’s previous government. The current government of President Andres Manuel Lopez Obrador, however, has suspended all future auctions, favouring instead a larger role for national oil company Petroleos Mexicanos, known as Pemex.

In other news, the blue-chip oil major recently agreed to sell its interests in Gulf of Suez oil concessions in Egypt to Dragon Oil.

Analysts on FTSE 100 oil major

Berenberg Bank reaffirmed the blue-chip oil major as a ‘buy’ last week, with a target of 620p on the BP share price. According to MarketBeat, the blue-chip group currently has a consensus ‘buy’ rating and an average valuation of 650.88p.

BP is scheduled to update investors on its second-quarter performance on July 30.

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