BP’s New Deepwater Oil Find

Oil major BP Plc (BP - Snapshot Report) has made a huge oil discovery in the deepwater Gulf of Mexico (GoM). The discovery well is located at its Tiber prospect, approximately 250 miles (400 kilometers) southeast of Houston and is in 4,132 feet (1,259 meters) of water. The well had oil in multiple Lower Tertiary reservoirs.

The Tiber prospect is operated by BP, Petrobras (PBR - Analyst Report) and ConocoPhillips (COP - Analyst Report) with their working interest of 62%, 20% and 18%, respectively.

Tiber is BP's second significant discovery in the emerging Lower Tertiary play in the Gulf of Mexico, following its earlier Kaskida discovery in 2006. Kaskida is operated by BP, Anadarko Petroleum (APC - Analyst Report) and Devon Energy (DVN - Analyst Report).

The discovery may signal new prospects in the deepwater Gulf of Mexico. While onshore oil exploration gets saturated over time, oil and gas giants and state-run oil majors scramble to find new deposits miles underground in offshore Brazil, the Gulf of Mexico, the North Sea and West Africa. The Tiber discovery follows Chevron’s (CVX - Analyst Report) success earlier this year with its Buckskin prospect, in Keathley Canyon.

While BP seeks for deepwater exploration, there are companies out there with more discoveries. BP also lacks infrastructure at other parts of the Gulf, serviced by pipelines. Even if the company’s stake in this project is worth 62%, it is to be seen how the needle moves for the $164 billion company.