Plains E&P to buy Gulf of Mexico assets from BP, Shell

Plains Exploration & Production Co. agreed to buy a number of deepwater Gulf of Mexico assets from BP PLC for $5.55 billion as part of BP’s previously announced plan to divest the assets and focus its gulf operations on producing more high-margin barrels from fewer, larger assets.

Separately, Plains E&P agreed to acquire 50% working interest in Holstein field from Shell Offshore Inc. for $560 million. Plains E&P also is buying BP’s 50% ownership stake in Holstein.

BP is selling two 100% owned assets: the Marlin hub (Marline, Dorado, and King fields) and Horn Mountain, as well as Holstein.

In addition, BP also is selling its stakes in two nonoperated assets: Ram Powell (BP 31%) and Diana Hoover (BP 33.33%).

Subject to regulatory approvals, certain preemption rights, and customary post-closing adjustments, BP expects closing by yearend.

BP plans to concentrate its future deepwater gulf activity and investment around its four major operated production hubs and three nonoperated production hubs in the deepwater along with exploration and appraisal opportunities, including the emerging Paleogene play in the Walker Ridge area.

Plains E&P Holstein deal

Plains E&P expects to close its acquisition of 50% working interest in Holstein field from Shell Offshore by yearend. Holstein lies in 4,400 ft of water in the southern Green Canyon area about 150 miles south of New Orleans.

As of July 31, Shell Offshore’s Holstein field properties produced an estimated 7,400 boe/d, of which nearly 86% was oil and natural gas liquids. The oil averages 33° gravity.

Upside production potential exists in the currently producing reservoirs through numerous low-risk, high-margin drilling, recompletion, and well workover opportunities. The transaction is subject to preferential rights, title and environmental due diligence and other customary closing conditions. This transaction is effective Oct. 1 and is expected to close by yearend.

Plains E&P said it will boost crude oil production to 89% of its total production in 2013, up from about 61% expected for 2012.

Including both the Shell and BP deals, Plains E&P expects to gain production of 67,000 boe/d.

BP outlines focus

BP expects to divest $38 billion worth of assets during 2010 through 2013, saying it is focusing its business around the world on its strengths and growth opportunities for growth. Counting the $5.55 billion, BP has agreed to sell or sold more than $32 billion in assets since Jan. 1, 2010.

Following closing of the Plains E&P transaction, BP will continue to operate four large production platforms—Thunder Horse, Atlantis, Mad Dog, and Na Kika. BP also will continue to hold interests in three nonoperated hubs—Mars, Ursa, and Great White.

“The Gulf of Mexico remains a key part of BP’s global exploration and production portfolio and we intend to continue investing at least $4 billion there annually over the next decade,” said BP Chief Executive Officer Bob Dudley.

In June, production started from the BP-operated Galapagos project tied back to the Na Kika platform. More production from Na Kika is expected to come on stream in 2013. Plans also are progressing for a second phase of Mad Dog field.

BP now has 6 drilling rigs operating in the gulf and expects to have 8 rigs in place by yearend, which would be the most it has ever had in the region.

BP holds more than 700 leases in the gulf, with a strong position in the emerging Paleogene play, including appraisal projects such as Kaskida and Tiber. BP acquired 43 new leases in the deepwater gulf in the June lease sale, which will be awarded subject to regulatory review.

Contact Paula Dittrick at paulad@ogjonline.com.

Related Articles

Market watch: Energy futures prices rose slightly Friday

05/06/2002 Crude oil futures prices rose slightly Friday amid lingering uncertainty about a possible disruption of Middle East supplies, although tensions in ...

Gulf of Mexico oil service sector showing signs of an upturn

05/06/2002 The Gulf of Mexico oil service sector is experiencing the signs of an upturn, analysts with Simmons & Co. International, UBS Warburg LLC, and RBC D...

OTC: Industry, national agencies need to work together to make FPSOs work in the gulf

05/06/2002 Over the coming years, the oil and gas industry will have to keep an open line of communication with national agencies such as the US Coast Guard a...

Market watch: Energy futures prices fall as Iraq lifts embargo

05/07/2002 Crude oil futures prices fell Monday after Iraq announced plans to lift a self-imposed export embargo with exports expected to resume by Wednesday.

Careers at TOTAL

Careers at TOTAL - Videos

More than 600 job openings are now online, watch videos and learn more!

 

Click Here to Watch

Other Oil & Gas Industry Jobs

Search More Job Listings >>
Stay Connected