BP intends to establish a separate business to manage its onshore oil and gas assets in the United States, specifically in the contiguous 48 states.
The “U.S. Lower 48” onshore oil and gas business environment has unique characteristics, company officials believe. Responding to these, the new business would 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 U.S. Lower 48 onshore sector, 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 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 U.S. Lower 48 onshore business, but 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 unique competitive and operating environment in the U.S. Lower 48 onshore sector. BP is expected to begin disclosing separate financials for the new business in 2015.
“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,” McKay said.
The approach BP intends to pursue for its US Lower 48 onshore business is specifically designed in response to the unique business environment in the region. 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.
“Participating in the U.S. 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,” McKay said.