BP said it had made a “significant” discovery in the deepwater US Gulf of Mexico, but also said it was writing off $1.08bn after poor results from a well off the coast of Brazil.
The discovery in the Gila prospect caps what BP described as its most successful year for new field exploration for almost a decade.
Gila, co-owned with ConocoPhillips, is located in the Paleogene trend, where BP has already made two big oil finds in recent years – Kaskida in 2006 and Tiber in 2009.
Though BP did not indicate how much oil Gila could contain, the discovery underscores the company’s gradual recovery from the 2010 Deepwater Horizon disaster, when an explosion on a drilling rig it was leasing in the Gulf of Mexico killed 11 men and unleashed the worst offshore oil spill in US history.
Last month, BP said it had nine drilling rigs operating in the deepwater Gulf of Mexico – a record for the company. It said that reflected the “vital importance” of the oil-rich basin to BP’s future.
BP used news of the Gila find to boast of its recent exploration successes. It said that in the course of 2013 it had participated in 15 completed exploration wells which resulted in seven potentially commercial discoveries.
Lamar McKay, head of BP’s upstream division, said the successes now being delivered through the company’s increased exploration activity “confirm our confidence in our ability to sustain BP’s resource base”.
The company also reminded investors of two other big oil finds it and its partners had made in recent weeks. One was the Pitu well in the deepwater Potiguar Basin off Brazil’s equatorial margin, a discovery that was announced by BP’s partner Petrobras earlier this week.
The other was Lontra, which was announced by Cobalt International Energy in the “pre-salt” region offshore Angola on December 1.
But there was some bad news too. BP said it was relinquishing a licence block off the coast of Brazil, BM-CAL-13, because an exploration well drilled there, Pitanga, had not encountered any commercial quantities of oil or gas.
It said it would write off $230m in drilling costs related to Pitanga and $850m associated with the value of BM-CAL-13, which it acquired as part of a deal with US oil group Devon Energy in 2010. The write-off represents more than 10 per cent of the $7bn value of the Devon acquisition.
The deal with Devon elicited considerable excitement at the time: vast amounts of oil have been discovered off Brazil over the past 6 years, particularly in the Santos Basin off the coast of Rio de Janeiro, home to the massive Lula “pre-salt” field. But the Devon blocks BP acquired in 2010 were far from the Santos.