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The Galapagos development is among the series of six new high-margin upstream projects that the company intends to bring online in 2012. The Galapagos development comprises three deepwater fields – Isabela, Santiago and Santa Cruz. Production from the fields is being churned out by using subsea equipment lying on the floor of the Gulf.
The output from this new development is transferred to the adjacent, BP-operated Na Kika host facility. A production flowline loop has been recently added for the purpose of carrying the yield to the platform, situated about 140 miles southeast of New Orleans, in a water depth of 6,500 feet.
With a daily production capacity of 130,000 barrels of oil equivalent, the Na Kika facility has been partially modified to manage the current yield from these three fields. Complete upgrade of the project is anticipated by June end.
BP has a total stake of about 56% in the three-block area including the fields comprising the Galapagos project. The other partners in these projects are Noble Energy, Inc. ( NBL - Analyst Report ) , Red Willow Offshore, LLC, and Houston Energy, L.P. BP has the operatorship of the Isabela field while the Santiago and Santa Cruz are operated by Noble Energy.
The commissioning of this project marks a significant milestone. BP expects the financial momentum from these operational initiatives to continue through 2013 and 2014. The Galapagos development also boosts the potential of BP as a key offshore production hub.
BP, which owns over 650 leases in the deepwater U.S. Gulf of Mexico, has re-established its position in the region with this project – the first new field development to come online since the Macondo disaster in 2010. In fact, the company has planned an annual investment of around $4 billion over the next decade in oil and gas development in the Gulf of Mexico. BP’s long-term strategy remains strengthening its position in the Gulf Coast region and the U.S.
BP holds a Zacks #3 Rank, which is equivalent to a Hold rating for a period of one to three months. Longer term, we maintain our Neutral recommendation on the stock.
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