BP says Australia drilling immune to capex cuts

OREANDA-NEWS. BP confirmed that its exploration programme for the Great Australian Bight (GAB) offshore South Australia will be unaffected by the company's plans to scale back capital expenditure (capex).

BP plans to drill four deepwater exploration wells from early 2016 in its GAB permits, subject to regulatory approval. Projected overall expenditure of about \$1.44bn includes a \$605mn guaranteed work programme and an additional \$832mn depending on initial exploration results, BP said.

BP owns 70pc of the GAB permits and 30pc is owned by Norwegian state controlled Statoil. BP plans a capex of \$20bn in 2015, or \$4bn-6bn below the guidance given in March 2014.

BP has applied for environmental approval to drill four deepwater exploration wells in a 12,100km? area offshore South Australia, one of the few frontier territories in Australian waters. The area is more likely to contain gas rather than oil, according to geologists.

The wells will be located about 400km offshore in water depths of 1km to 2.5km, within the Ceduna 3D seismic survey area where data was collected by BP between November 2011 and May 2012.

BP is optimistic about finding hydrocarbons through its exploration, which marks its return as an operator of an exploration programme in Australia after an absence of more than 25 years. One of the permits covers the area where Australian independent Woodside Petroleum drilled the Gnarlyknots wells that came up dry in 2003.

Woodside drilled only to depths of less than 4,000m. But BP has assessed that sedimentary basins lie at depths greater than 4,000m and intends to drill to depths of up to 5,000m.