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BP Kick-Starts Ghazeer Gas Production Ahead of Schedule

Zacks Equity Research
·3 min read

BP plc BP recently announced the commencement of production, ahead of schedule, from the Block 61 Phase 2 Ghazeer gas field in Oman. The production started 33 months after the approval of development. It was earlier expected to come online in 2021. Projects like this can support the company’s plans of transformation.

Production in the Block 61’s first phase development, Khazzan, was started in 2017. The block’s total daily production capacity is estimated to increase to 1.5 billion cubic feet of natural gas and more than 65,000 barrels of associated condensate. The block has a recoverable natural gas resource of 10.5 trillion cubic feet. It is expected to address 35% of the country’s total natural gas demand. As such, production from the giant Ghazeer natural gas field will likely benefit the local industries and further boost the economy of Oman.

The block holds the significance as one of the largest tight gas accumulations in the Middle East. The produced commodity from the block is used for domestic consumption. It also supplies feedstock for Oman LNG. The British energy giant’s Trading and Shipping arm buys 1.1 million tons of liquefied natural gas per year from Oman LNG through a seven-year deal, which commenced in 2018.

BP used its experience in U.S. onshore operations for well tests and completions in Ghazeer, which in turn enabled it to reduce emissions. Instead of flaring the natural gas produced during well testing, the company transported it to the production facility. This process has enabled the company to save emissions of carbon dioxide equivalent of 201,000 tons since 2019.

The project further strengthens BP’s presence in Oman, where it has an upstream presence since 2007. The Block 61 Phase 2 project was sanctioned in April 2018. BP has a 60% stake in the Block 61. It has Makarim Gas Development Limited and Malaysian oil and gas company PETRONAS as partners in the block with 30% and 10% interests, respectively. For Block 77, BP is partnering with Eni S.p.A. E for a massive exploration opportunity, which received a green signal this March.

Price Performance

BP’s shares have fallen 30.8% in the past six months compared with 19.6% decline of the industry it belongs to.

Zacks Rank & Stocks to Consider

BP currently has a Zacks Rank #4 (Sell). Some better-ranked players in the energy space include Apache Corporation APA and Matador Resources Company MTDR, each holding a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Apache’s bottom line for 2021 is expected to surge 84.3% year over year.

Matador Resources’ sales for 2021 are expected to rise 12.2% year over year.

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Apache Corporation (APA) : Free Stock Analysis Report
 
Eni SpA (E) : Free Stock Analysis Report
 
BP p.l.c. (BP) : Free Stock Analysis Report
 
Matador Resources Company (MTDR) : Free Stock Analysis Report
 
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