BP's US onshore oil and gas business is performing "better than we expected", the company said today.
BPX Energy — which operates in the US lower 48 states — produced 273,000 b/d of oil equivalent (boe/d) in the April-June quarter, down from 364,000 boe/d a year earlier but up from 262,000 boe/d in the previous quarter. The average number of BPX Energy-operated rigs stood at eight in the second quarter, compared with nine in the January-March period.
"We are running seven-to-eight rigs today. [The business] is free-cash-flow positive year-to-date. It is doing very well. We will spend less capital there this year than we did last year," said BP chief executive Bernard Looney.
In the first half of 2021, capital expenditure (capex) amounted to $438mn, compared with $1.04bn a year earlier.
"We probably will bring the capital up a little bit in that business, but we are not focused on production growth — we are focused on cash flow growth," Looney said.
BPX Energy combines BP's legacy assets in the US onshore and those bought from UK-Australian firm BHP for $10.5bn.
"The reservoirs continue to look fantastic, better than we expected. We have now delivered $400mn of synergies versus the $350mn that we have planned," Looney said. "And we have just drilled our first well in the Louisiana Haynesville [shale] in 10 years. Three 8,000-foot laterals at $3 Henry Hub, and I think Henry Hub today is closer to $4 than it is to $3. Those wells deliver 80pc returns."
BP chief financial officer Murray Auchincloss said that the company "will gradually ramp up the activity and make sure that we get a decent size dividend out of it each year.
"We have a very strong resource base there," Auchincloss said.
