Industry giant BP is splitting its U.S. operations into a separate business in an effort to keep pace with smaller independent producers.
“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,” said Lamar McKay, chief executive of BP’s upstream division.
The new business, which has not been named yet, will include BP’s operations in the Lower 48 states. It will be led by a separate management team, housed at a new location in Houston from BP’s campus there.
“We have a significant proportion of our total resource base in the Lower 48 and we have substantially repositioned this business in recent years, exiting non-core assets and adding quality shale positions,” CEO Bob Dudley said Tuesday. “With the rapidly evolving environment, our business has become less competitive.
“There is significant value to unlock through improving the cycle time from access through to production, and the efficiency of cost management.”
BP has operations in every state, with an unconventional resource base of 7.6 billion barrels of oil equivalent over 5.5 million acres of leasehold. The company has invested nearly $50 million in the U.S. over the past five years. It is the second-largest natural gas producer in Oklahoma, with more than 1,500 wells across three different basins.
BP also has holdings in Alaska, the Gulf of Mexico and around the world, including a stake in Rosneft, Russia’s largest oil company.
McKay said BP's new business has what it takes to thrive.
“We believe there is potential to unlock significant value from this resource base and we have decades of experience in the necessary technologies,” he said.