Release date: 4 March 2014
BP today announced its intention to establish a separate business to manage its onshore oil and gas assets in the US Lower 48.
The US Lower 48 onshore oil and gas business environment has unique characteristics. Responding to these, the new business will 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 US Lower 48 onshore, 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 US 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 US Lower 48 onshore business, with safety remaining its top priority. 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 US Lower 48 onshore. And BP is expected to begin disclosing separate financials for the new business in 2015.
These changes are chiefly intended to improve competitiveness of the US Lower 48 onshore business through greater speed of innovation, faster decision-making and shorter cycle times from access through to production, together with more efficient cost management.
"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 changes to BP's US Lower 48 onshore business are consistent with the group's strategy of delivering value over volume. BP also believes these moves will enhance efforts to develop industry-leading technology that will be a critical part of BP's global strategy in unconventional oil and gas resources going forward.
"Participating in the US 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.
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.
Over the past five years, BP has invested nearly $50 billion in the US – more than any other energy company. BP is a leading producer of oil and gas and provides enough energy annually to light nearly the entire country for a year. Employing approximately 20,000 people in all 50 states, BP supports more than 260,000 jobs total through all of its business activities. For more information, go to www.bp.com/us.
BP Press Office, Houston, +1 281 366 4463, email@example.com
This press release contains certain forecasts, projections and other forward-looking statements regarding BP's plans to establish a separate business to manage its onshore oil and gas assets in the US Lower 48, including regarding: the expected impact on the competitiveness of the US Lower 48 onshore business; expectations that the separation of the US Lower 48 onshore business will help unlock significant value associated with BP's extensive resource position in the US Lower 48 onshore; the expected ownership structure of the separate US Lower 48 onshore business in the future; expectations regarding the governance, processes and systems of the separate US Lower 48 onshore business in the future; expectations regarding BP's disclosure of separate financials for the separate US Lower 48 onshore business in the future, and the expected timing thereof; expectations that the US Lower 48 onshore business will be a key component of BP's portfolio in the future; the expected impact of the separation of the US Lower 48 onshore business on BP's global strategy in unconventional oil and gas resources and on efforts to develop industry-leading technology; BP's belief that the US Lower 48 onshore region will remain at the forefront of innovation and drive global learning in unconventional resources in the future; and expectations regarding BP's approach to other onshore regions around the world. By their nature, forward-looking statements involve risk and uncertainty because they relate to events and depend on circumstances that will or may occur in the future. Actual results may differ from those expressed in such statements, depending on a variety of factors including the timing and receipt of governmental and regulatory approvals; future levels of industry product supply; demand and pricing; operational problems; economic and financial conditions generally or in various countries and regions; political stability and economic growth in relevant areas of the world; changes in laws and governmental regulations; regulatory or legal actions, including the types of enforcement action pursued and the nature of remedies sought or imposed; the actions of prosecutors, regulatory authorities and courts; exchange rate fluctuations; the timing and volume of refinery additions and outages; the timing of bringing new fields onstream; the timing, quantum and nature of certain divestments; the development and effective use and maintenance of new technology; the actions of competitors, trading partners, creditors, rating agencies and others; natural disasters and adverse weather conditions; changes in public expectations and other changes to business conditions; wars and acts of terrorism, cyber-attacks or sabotage; and other factors discussed under "Principal risks and uncertainties" in our Stock Exchange Announcement for the period ended 30 June 2013 and under "Risk factors" in our Annual Report and Form 20-F 2012 as filed with the US Securities and Exchange Commission.
Cautionary note to US investors – This press release uses terms, such as "unconventional resource base", and contains references to non-proved resources that the SEC's rules prohibit us from including in our filings with the SEC. US investors are urged to consider closely the disclosures in our Form 20-F, SEC File No. 1-06262. This form is available on our website at www.bp.com You can also obtain this form from the SEC by calling 1-800-SEC-0330 or by logging on to their website at www.sec.gov.