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BP Makes Significant Oil Discovery in Norway's North Sea

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BP plc (BP - Free Report) , through its subsidiary Aker BP, made a significant oil discovery in the Ost Frigg Beta/Epsilon exploration well in Norway’s North Sea.

Aker BP is about to complete drilling the exploration well, which is in licenses 873 and 442 in the Yggdrasil area. The company is drilling the well with the help of Saipem’s Scarabeo 8 semi-submersible rig. Aker BP operates the 873 and 442 licenses with 47.7% and 87.7% interests, respectively.

According to preliminary estimates, the latest discovery shows a gross recoverable volume of 40-90 million barrels of oil equivalent (MMboe). This exceeds the pre-drill estimate of 18-45 MMboe.

The latest discovery increased the resource base for the Yggdrasil development, which was previously expected to be 650 MMboe (gross). The latest discovery will be assessed as a potential addition to the Yggdrasil development.

In December 2022, Aker BP submitted plan for development and operations for the Yggdrasil project to Norway authorities. The North Sea is home to significant known oil and gas reserves. Production from the Norwegian North Sea area is scheduled to begin in 2027.

In March 2023, Aker BP announced that it will proceed with nine field development projects on the Norwegian continental shelf, which are expected to see an investment of more than NOK 200 billion.

Yggdrasil, which already holds multiple discoveries, is planned to be developed with an investment of NOK 115 billion. Aker BP sees further upside potential around Yggdrasil and will continue exploration activities in the area.

Price Performance

Shares of BP have outperformed the industry in the past six months. The stock has gained 1.9% against the industry’s 5.3% decline.

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Zacks Rank & Key Picks

BP currently carries a Zack Rank #3 (Hold).

Some better-ranked players in the energy space are Murphy USA Inc. (MUSA - Free Report) , Sunoco LP (SUN - Free Report) and Dril-Quip, Inc. (DRQ - Free Report) . While Murphy USA and Sunoco sport a Zacks Rank #1 (Strong Buy), Dril-Quip carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Murphy USA announced first-quarter 2023 earnings per share of $4.80, which beat the Zacks Consensus Estimate of $4.06. The outperformance can be attributed to higher volumes and retail fuel contribution.

MUSA is committed to returning excess cash to its shareholders through continued share buyback programs. As part of this initiative, the motor fuel retailer recently approved a repurchase authorization of up to $1.5 billion following the completion of the existing $1-billion mandate. The move underscores MUSA’s sound financial position and commitment to rewarding its shareholders.

Sunoco reported first-quarter 2023 earnings of $1.41 per unit, beating the Zacks Consensus Estimate of $1.21. Better-than-expected quarterly earnings were primarily driven by higher contributions from the Fuel Distribution and Marketing segment.

For 2023, SUN revised its adjusted EBITDA guidance upward to $865-$915 million from the previously mentioned $850-$900 million.

Dril-Quip reported a first-quarter 2023 adjusted loss of 1 cent per share, narrower than the Zacks Consensus Estimate of a loss of 2 cents. This was due to improved performances of key offshore markets and some reemerging areas.

For 2023, DRQ expects product booking growth of 10-20%. The company reported net bookings of $53.5 million for the first quarter. Backlog rose 6% year over year due to an increase in product bookings following improved market conditions

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