British energy giant
) recently declared the appointment of Richard Herbert as its new
head of exploration. Herbert will replace Mike Daly who will
retire at the end of 2013.
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Herbert would join BP from
), where he is the executive vice president for exploration since
2009. Prior to that Herbert had a six-year stint with TNK-BP in
Russia, first as vice president of exploration and then as
executive vice president for technology.
Considering Herbert's expertise in exploration and his long
managerial experience around the world, he can easily be labeled
as a veteran in the sector. We expect him to provide meaningful
support to BP's upstream and exploration strategy.
Going forward, 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 Gulf of Mexico (GoM) region, with stake in
more than 700 leases. In the deepwater GoM region, BP currently
has seven rigs drilling this year, up from five rigs in the
recent past. Another rig is expected to be added later in the
BP has a strong pipeline of projects and expects four additional
upstream ventures to commence by the end of 2013. Of these,
Angolan LNG and Atlantis North Expansion commenced operations in
the first half of 2013, while Australia-North Rankin phase 2 and
Azerbaijan-Chirag are on track to start production in the second
Six more project start-ups are expected by next year. Altogether,
BP has about 50 major assignments through the decade. Eleven of
these involve more than $10 billion in total cost.
During 2013, the company plans to drill 15-20 explorations wells,
up from 9 in 2012. The company has already completed 4 wells in
Brazil, North Sea and India, with 11 more exploration wells
underway in the GoM, Brazil, Angola, Egypt, Jordan, India and
Indonesia. In fact, BP doubled its 2013 upstream spending budget
to $2.5-$3 billion over the last few years.
However, BP's earnings and revenues decreased on an annualized
basis during the second quarter. Earnings in upstream experienced
a decline due to lower liquids price realization and higher
costs. Total production also fell on an annualized basis mainly
due to field declines and divestments. Thus, the results raise
concerns with respect to its performance in the coming years.
U.K.'s second largest oil company by market value after
Royal Dutch Shell plc
) is supported by a Zacks Rank #3, which is equivalent to a Hold
rating for a period of one to three months. However, there are
other stocks in the oil and gas sector such as
) which hold a Zacks Rank #1 (Strong Buy) and are expected to