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BP to Discontinue Drilling Program in Great Australian Bight

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BP plc (BP - Free Report) recently announced its decision to discontinue exploration drilling program in the Great Australian Bight (“GAB”), offshore South Australia.

The appraisal and evaluation of BP’s upstream strategy in early 2016 led to this move. BP believes that, in the near future the GAB project will not be competitive enough for as much capital investment as other upstream opportunities in its global portfolio.

According to its upstream strategy, BP intends to focus exploration on prospects expected to create value in the near to medium term, mainly based on its significant existing upstream positions.

BP’s decision to pull out from the region is neither because its view regarding the region’s prospects has changed nor because of the ongoing regulatory process. On the contrary, the company’s decision underscores its strategy and the competitiveness of this project in its portfolio.

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BP has also discussed this with its joint venture partner, Statoil ASA . The latter has displayed a complete understanding of BP’s change in strategic direction and accepted its decision.

BP was rewarded exploration licenses for four blocks in the Ceduna area of the GAB in Jan 2011. The company acquired seismic data in the area in the period between late 2011 and early 2012. In 2013, Statoil farmed in 30% in the licenses, while BP remained the operator with an interest of 70%.

Currently, BP carries a Zacks Rank #5 (Strong Sell). Some better-ranked players from the energy sector include Enviva Partners, LP (EVA - Free Report) and Evolution Petroleum Corp. (EPM - Free Report) . All of these stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Enviva Partners has a mixed earnings surprise history. The partnership posted positive earnings surprise in two of the last four quarters. It reported a positive earnings surprise of 20.51% in the preceding quarter.

In the last reported quarter, Evolution Petroleum Corp. delivered a positive earnings surprise of 350.00%. Coming to the earnings surprise history, the company beat estimates in two of the last four quarters.

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