BP remains focused on its transformation into an integrated energy company, interim CEO Murray Auchincloss told analysts during the company’s third quarter 2023 webcast. Throwing cold water on a Reuters report that BP was seeking joint ventures in the Eagle Ford and Haynesville shales, Auchincloss said the plan was to grow production organically, ruling out M&A for now.
Auchincloss said BP has a “great portfolio” in the U.S. with “great resources” to be developed by its U.S. upstream subsidiary BPX Energy without a need for more acreage.
“We will consider countercyclical moves,” Auchincloss said. “But we're very, very happy with our position in the U.S., and we just need to organically develop that now.”
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Auchincloss said BP had capacity to grow organically between 2023-2025, and reiterated the company’s view on inorganic growth in the aftermath of recent mega acquisitions announced by its U.S. peers Exxon Mobil and Chevron to acquire Pioneer Natural Resources and Hess Corp., respectively.
“So those inorganic [opportunities] that we were thinking about, we're just going to pass on those for now,” Auchincloss said. “So, we're really focused on organically driving shareholder value for our shareholders. So … M&A is really not on our minds, if I'm honest.”
Permian, other U.S. onshore advances
BP executives said the company started up Bingo, BPX’s second major central processing facility in the Permian Basin during the quarter, which will allow the company to double its oil and gas processing capacity there.
BPX began operating as a standalone entity in 2015. BPX comprises BP’s onshore oil and gas operations in the Lower 48 and operates in the Permian’s Delaware Basin and Eagle Ford in Texas as well as the Haynesville in Texas and Louisiana. BPX is focused on producing high-margin barrels while driving down emissions, BP said.
Elsewhere in the U.S., BP executives said the company continued its pivot to transition growth engines in the biofuels space with Archaea Energy and the “first Archaea Modular Design renewable natural gas plant now online in Medora, Indiana, underpins confidence in [the company’s] expansion plans going forward.”
On development of hydrogen, BP executives said the company has been selected by the U.S. Department of Energy to develop a regional clean hydrogen hub in the Midwest.
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U.S. offshore wind
BP’s efforts related to wind energy offshore New York in the U.S. haven’t gone exactly according to the U.K. company’s plans.
The company’s request to renegotiate its power purchase agreements with New York was rejected in June, which forced the company to take a $540 million pre-tax impairment charge, BP interim CFO Katherine Thomson said during an earnings webcast with analysts.
“Looking forward, well, we'll need to see how circumstances evolve and continue to run our typical processes,” Thomson said.
“We'll work with our partners closely on the way forward. As you'd imagine us to say … those decisions will be based on value,” Thomson added. “We need to see those projects continue to meet a 6% to 8% unlevered return, which is what we've been clear on with regard to offshore wind and our requirements. So let's see how it evolves.”
Auchincloss reiterated that BP has really focused on integration in the offshore wind space. He said the company was taking electrons in the U.K. and Germany and providing them to the rest of the company’s businesses.
“[We’re] focused much more on the integrated opportunities that we see in Europe. And that's why you didn't see us bid in many of the offshore wind rounds in the U.S. over the recent quarters,” Auchincloss said.
Auchincloss also said BP was focused on trying to understand a 10-point plan recently released by the state of New York.
“The U.S. is a bit sticky right now with rising interest rates and power prices aren't quite converging with those,” Auchincloss said. “But by and large, across Europe and Asia, we see those as working out.”