London — BP remains committed to its fast-growing US onshore shale business despite ambitious targets to slash its dependence on carbon-intensive oil and gas over the next decade, the company CFO Murray Auchincloss said Aug. 4.
The investment rationale for BP's US shale oil and gas assets "remains strong," with expected cost savings set to boost earnings from the business, Auchincloss told analysts on a strategy presentation.
BP has been increasing activity and optimizing operations at its US shale acreage purchased from mining giant BHP in 2018 for $10.3 billion.
Oil production from the US shale business, known as BPX, has tripled to 127,000 b/d after the purchase of BHP's assets mostly in the Eagle Ford and Permian shale basins.
"The reservoirs are better than we thought," Auchincloss said, "We're finding more zones than we thought originally...and obviously, the capital is deflating these days, service rates are down so when we start drilling again, service rates are going to be an awful lot lower."
Auchincloss said BP also expects to find additional cost savings to the targeted $400 million in synergies at the time of the acquisition.
BP has said spending curbs during 2020 due to the pandemic will reduce its production by 70,000 b/d of oil equivalent this year, with most of the reduction to occur at the company's BPX shale business.
BP said earlier it expects to see its upstream global production fall by at least 40% by 2030 as it spends less on exploration and development and sells off some producing assets.
During the second quarter of 2020, BPX's total production slipped to 364,000 boe/d, down from 499,000 boe/d in the year-ago period reflecting a 26% fall in its shale gas production as drilling almost halted amid the coronavirus pandemic.