BP has announced its intention to establish a separate business to manage its onshore oil and gas assets in the US Lower 48. The new business will operate separately from the rest of BP and will be designed to adapt to the rapidly changing and hyper-competitive energy landscape in the region. This move is expected to help unlock the significant value associated with BP’s extensive resource position in the US Lower 48 onshore, which BP currently oversees through its Houston-based North America Gas group.
“Over the last few years, we have fundamentally reshaped our North America Gas portfolio,” said BP Upstream Chief Executive Lamar McKay. BP has done so by divesting non-core assets and focusing development in leading US unconventional plays like the Eagle Ford Shale in South Texas. “Now it’s time to reshape the way we run the business, and we are very excited about this bold step forward,” he said.
BP will own the new US Lower 48 onshore business, with safety remaining its top priority. The business will be led by a separate management team and be housed at a new location in Houston, apart from BP’s Westlake campus. It will have separate governance, processes and systems designed to address the competitive and operating environment in the US Lower 48 onshore. BP is expected to begin disclosing separate financials for the new business in 2015.
These changes are chiefly intended to improve competitiveness of the US Lower 48 onshore business through greater speed of innovation, faster decision-making and shorter cycle times from access through to production, together with more efficient cost management. Much of what BP does in other onshore regions around the world will continue to rely on the scale, capital, technology and project management capabilities that only a major international oil company can provide.
“Our overriding goal is to build a stronger, more competitive and sustainable business that we expect will be a key component of BP’s portfolio for years to come,” Mr McKay said.
The changes to BP’s US Lower 48 onshore business are consistent with the group’s strategy of delivering value over volume. BP also believes these moves will enhance efforts to develop industry-leading technology that will be a critical part of BP’s global strategy in unconventional oil and gas resources going forward.
“Participating in the US Lower 48 onshore is key to our upstream strategy because we believe the region will remain at the forefront of innovation and drive global learning in unconventional resources,” Mr McKay said.