BP scales back on two Gulf of Mexico fields

BP has scaled back its involvement in two huge oil fields in the Gulf of Mexico, handing US-based giant Chevron a big stake in the development of an estimated 1bn barrels or more of crude.

The UK-based energy major said on Wednesday it had formed a new ownership and operating model with Chevron and ConocoPhilips, selling half its equity interests in the Gila and Tiber fields, huge deepwater discoveries found during the last decade.

The decision is the latest move by BP, which has sold more than $40bn of assets since the Deepwater Horizon disaster in 2010, to pare back its balance sheet and slash costs. The company declined to put a value on the deal or disclose any cost savings it expects to make from reduced exploration and development spending.

It also marks a significant strategic retreat for BP, for which Tiber was a landmark discovery in 2009.

The group has opted not to take a lead role as operator in what are some of the most important discoveries in the Gulf of Mexico in recent years and a geological layer - the Paleogene trend - seen as the most promising area for the region's future development.

The Tiber exploration well - the deepest commercial oil well ever at the time - was drilled by Transocean's Deepwater Horizon rig, which exploded and sank in the Macondo disaster seven months later in April 2010.

Under the agreement, Chevron and Conoco have also agreed to joint ownership interests in exploration blocks east of Gila known as Gibson, where they plan to drill in 2015.

BP, Chevron and Conoco would have the same working interests across Gila and Gibson and any future centralised production facility, it said. Chevron would hold equity interest of 36 per cent, BP 34 per cent and Conoco, 30 per cent.

In Tiber, BP and Chevron would each hold equity interest of 31 per cent, Petrobras 20 per cent and Conoco, 18 per cent.

BP said that combining the resources of the companies would "provide greater efficiency through scale, reduce subsurface risk and increase the likelihood of achieving a future commercial development."

"Completing these agreements will enable BP to do three things that are at the core of our strategy in the deepwater Gulf of Mexico," said Richard Morrison, president of BP's Gulf of Mexico business.

"It will support continued exploration and development in the Paleogene, which we expect to be a key part of our future in the region. It will allow us to manage and maintain capital discipline by sharing development costs."

Shares in BP were down 1.3 per cent at 434.9p in afternoon London trading.

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