BP's Ula Oil Field Shut after Leak

BP Plc ( BP - Analyst Report ) said that it has shut down a Norwegian oil and gas field, Ula, following a substantial oil and gas leak on its production platform. The embattled British giant, who is struggling to restore its reputation following the disastrous 2010 Gulf of Mexico (GoM) oil spill, stated that it will not resume production until the causes of the occurrence have been determined and the conditions restored.

On September 12, considerable amounts of hydrocarbons escaped into the Norwegian waters of the North Sea. According to the Norwegian Petroleum Safety Authority, or PSA, the leak took place in the separator module on Ula's production platform.

The facility was automatically shut down six days following the incident. Although BP evacuated the workforce to the neighboring drilling site, PSA believes the event could have taken dangerous proportions. The company had already initiated its own investigation but pointed out that it was too early to determine the amount of the spilt oil.

The Ula field − located in the southern part of the North Sea − achieved 317,500 barrels of oil, or about 10,200 barrels per day, in July as per the Norwegian Petroleum Directorate. Ula is a comparatively small and mature oil field and BP operates it with an 80% interest, while its associate partner Dong E&P Norge AS holds the remaining 20% stake.

The oil field had a peak production of 52.4 million barrels or 143,600 barrels per day, way back in 1993. However, its production dropped to an average 4.8 million barrels, or 13,200 barrels per day last year.

After the GoM oil spill in 2010, which killed 11 workers and spewed more than 200 million gallons of crude, BP is striving to improve its revenue flow. The company is confronting a trial in the U.S. for gross negligence in the most dreadful oil spill in the country’s history.

Additionally, BP’s second quarter earnings have been adversely impacted by the effects of price movements. Again, its far-reaching turnaround and maintenance ventures will continue into the upcoming quarter, further adding to the financial woes. We maintain our long-term Neutral recommendation on BP, Europ's second largest oil company following Royal Dutch Shell Plc ( RDS.A - Analyst Report ) .

BP retains a Zacks #3 Rank, which is equivalent to a Hold rating for a period of one to three months.