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BP Hits Oil in GoM Since '10 Blowout

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Oil major BP plc (BP) along with its partner ConocoPhillips (COP) has made a huge find at its Gila prospect, in the deepwater U.S. Gulf of Mexico (GoM).

The discovery represents the first major find by BP since the massive rig outburst that caused the worst environmental tragedy in the U.S. history. After the Macondo well blowout, the U.S. regulators lifted a five-month ban on deepwater drilling in 2010. The latest find is the third discovery in recent years in the emerging Paleogene trend in the Gulf. The previous finds were Kaskida in 2006 and Tiber in 2009.

BP hit oil at depths of around 9,150 meters (30,000 feet) in the Gila prospect by an exploration well on Keathley Canyon Block 93, about 300 miles southwest of New Orleans, in around 4,900 feet of water.

The well, which infiltrated multiple Paleogene-aged reservoir sands, was drilled to a total depth of 29,221 feet. In order to establish the size and potential viability of the find, appraisal drilling including completion of drilling through the Paleocene section, is necessary.

Located about 25 miles west of Tiber, the Gila discovery is operated by BP with a majority interest of 80%, while the remaining 20% is held by ConocoPhillips. The find is situated in the Keathley Canyon area. The lease for Keathley Canyon Block 93 was obtained in the Western Gulf of Mexico Lease OCS Sale 187 in 2003.  

BP and its subsidiaries have been exploring in the deepwater GoM since the 1950s. The U.K. giant expects its deepwater segment to form an integral part of its business goal as it is the largest leaseholder in the GoM region, with stakes in more than 650 leases. In the deepwater GoM region, BP has seven rigs drilling this year, up from five rigs until recently.

BP carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the oil and gas sector include Abraxas Petroleum Corp. (AXAS) and Tesco Corp. (TESO). All these stocks hold a Zacks Rank #1 (Strong Buy).

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