BP plc (BP - Free Report) and Oman Oil Company Exploration & Production inked an agreement with the Government of the Sultanate of Oman to modify the Oman Block 61 exploration and production sharing agreement (“EPSA”) pertaining to extension of the license area. This is likely to aid further development of the massive Khazzan tight gas field.
Per the modified EPSA, more than 1000 square kilometers will be added to the south and west of the original 2,700 square kilometers of Block 61 after the aforesaid extension. It would also facilitate the second phase of development as well as help to retrieve additional gas in the area earlier recognized by drilling activity within the original block. Development of this additional resource is subject to final approval of the Government of Oman and of BP, both of which are expected in 2017.
BP, the operator of Block 61, has an interest of 60%. Oman Oil Company Exploration & Production holds the remaining 40%.
The Khazzan reservoir in Block 61, which is considered to be one of the largest unconventional tight gas accumulations in the Middle East, are expected to be a key new source of gas supply for Oman over many decades.
Production from Khazzan will support the steady and long-term domestic supplies of gas for Oman. In fact, output from these reservoirs will account for about 40% of the country’s current total domestic gas production.
Sanctioned in Dec 2013, the Phase 1 project is more than 80% complete and is on schedule to yield its first gas in late 2017. Subject to final approval, Khazzan Phase 2 project is expected to be commissioned around 2020.
Collectively, the projects are estimated to yield 1.5 billion cubic feet per day (bcf/d) of gas through development of 10.5 trillion cubic feet of recoverable gas resources. This will include construction of a three-train central processing facility with related gathering and export systems and drilling more than 300 wells over a 15-year period. Improved reservoir performance, drilling efficiencies and other improvements have reduced well count by about 100 from the original Phase 1 plan.
BP currently has a Zacks Rank #3 (Hold). Some better-ranked players from the same sector are W&T Offshore Inc. (WTI - Free Report) , Braskem SA (BAK - Free Report) and TransCanada Corporation (TRP - Free Report) . All these stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
W&T Offshore posted a positive earnings surprise of 44.19% in the preceding quarter. It reported a positive earnings surprise in all of the four preceding quarters.
Braskem SA posted a positive earnings surprise of 105.45% in the prior-year quarter.
TransCanada posted positive earnings surprise of 22.92% in the last reported quarter.
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