BP’s oil and gas production growth stalled in the third quarter but the company said Tuesday it expects upstream growth to resume withing days after closing its $10.5 billion acquisition of BHP’s US shale business. Europe’s second-biggest oil major also said it now expects to fully fund the landmark shale deal with cash, reflecting growing confidence over its balance sheet as the oil market firms. Reporting sharply higher profits, BP said its upstream production, excluding its 20% stake in Rosneft, was 2.46 million b/d of oil equivalent for the third quarter, little changed from a year ago. BP has lost more than 100,000 boe/d of production from asset sales and portfolio changes over the last year, mostly from the Abu Dhabi offshore concession, which expired this year.
Indeed, adjusting for portfolio and price impacts, underlying production was 6.8% higher on the year in the third quarter, BP said, driven by the continued ramp-up of production from major projects. For the year to date, underlying production growth is around 10% as new, gas-focused projects come on stream. BP’s Thunder Horse Northwest expansion project in the Gulf of Mexico and the Western Flank B project in Australia began production in October ahead of schedule. Shah Deniz 2 in Azerbaijan, Taas-Yuryakh expansion in Russia, and Atoll in Egypt also started up during the first half of the year. The Clair Ridge project in the UK is still expected to start production before year-end.
BP expects to close its acquisition of a portfolio of US onshore oil and gas assets from BHP on Wednesday, creating a new production heartland for the major, adding billions of barrels of existing reserves within the US’ prime shale oil and gas plays. The acquisition, BP’s largest in two decades, adds 190,000 boe/d to the company’s production and 4.6 billion boe discovered resources to its upstream operations. The BHP assets, which include liquids-rich shale in the Eagle Ford basin in Texas and in the Haynesville gas basin, are 45% liquids and provide significant potential for continuing growth. Announcing the BHP deal in July, BP said it expected its crude and gas flows from the deal to improve its already market-leading annual production growth target of 5% on average to 2021.