BP Plc (BP) has projected twice the current output from its Mad Dog field in the deep-water Gulf of Mexico after an appraisal well revealed new resources.
The untested northern segment of the Mad Dog field proved invaluable to the company. BP increased the total hydrocarbon reserve, including production from the existing field, up to an estimated 4 billion barrels of oil equivalent, though this is conditional on future appraisal drilling.
The well – located on Green Canyon block 738 approximately 140 miles south of Grand Isle, Los Angeles– was drilled by partner BHP Billiton (BHP) on behalf of the unit operator BP. It struck about 166 feet of hydrocarbons in the Miocene hydrocarbon-bearing sands and also discovered an oil column of more than 300 feet.
Initially, the field was estimated to have recoverable reserves of 200–450 million barrels of oil equivalent. Production from the field has yielded 200 million barrels of oil equivalent of oil so far. BP had stopped the operations early in the year for making repairs to the spar’s drilling rig module following hurricane damages.
The field, which became operational in 2005, has been using a truss spar platform for production. The operator BP has been planning to upgrade its facility by adding another spar facility to support additional discoveries made in 2009. This would augment the production capacity to 120,000–140,000 barrels of oil equivalent per day as against the current handling capability of 80,000 barrels per day of oil and 60,000 cubic feet per day of gas.
BP retains a 60.5% working interest in the Mad Dog field while partners BHP Billiton and Chevron Corporation (CVX) hold 23.9% and 15.6%, respectively.
BP’s latest success with Chevron’s Moccasin discovery in Keathley Canyon block 736, in which BP holds 43.75% working interest asserts the potential for exploration and development that still exists in the deepwater of Gulf of Mexico.
BP has a Zacks #3 Rank which translates into a Hold rating for a period of one to three months. We maintain a Neutral rating on the stock for the longer term.
