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BP Gains Approval to Develop Vorlich Field in North Sea

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BP plc (BP - Free Report) recently secured approval for developing the Vorlich oil field, located in the central North Sea, from the U.K. Oil and Gas Authority (OGA). The development project is expected to cost £200 million (around $262 million).

The oilfield is expected to witness a peak production level of 20,000 barrels of oil equivalent per day (Boe/d). The company plans to produce 30 million barrels of oil equivalent from the field, once developed. Discovered in 2014, the Vorlich oil field flowed at 5,350 Boe/d during the test period. Majority of the production during the test period comprised oil (80%).

Per the company, it is a two-well development project, located around 241 kilometers east of Aberdeen. The wells are expected to be tied back to the FPF-1 floating production facility, which is operated by Ithaca Energy, a United Kingdom-based oil and gas company with sole focus on the North Sea. Notably, it holds 34% stake in Vorlich, while BP owns 66%.

BP anticipates the Vorlich field, which is part of its “refreshed North Sea portfolio”, to come online in 2020. The OGA is of the view that production from the field will support its Maximising Economic Recovery UK (MER UK) strategy. By using the existing infrastructure, production from the Vorlich field will increase and help generate maximum value from the Greater Stella Area hub, wherein the FPF-1 floating production facility is positioned.

BP announced its plan of developing the Vorlich field along with the Alligin field this April. Like Vorlich, Alligin is also a two-well development project. It is located around 140 kilometers west of Shetland, and is expected to be tied back to the company’s Glen Lyon floating, production, storage and offloading (FPSO) vessel. While BP is the operator in the field with 50% interest, Royal Dutch Shell plc (RDS.A - Free Report) owns the rest.

Price Performance

BP has gained 15.5% in the past year compared with 12.4% collective growth of the industry it belongs to.



Zacks Rank and Stocks to Consider

Currently, BP has a Zacks Rank #3 (Hold). Investors interested in the Oil and Gas sector can opt for some better-ranked stocks like Magnolia Oil & Gas Corp (MGY - Free Report) and Oasis Midstream Partners LP (OMP - Free Report) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Houston, TX-based Magnolia is an upstream energy company. The company’s top line for 2018 is expected to reach $934.9 million, with earnings estimates pegged at $1.50 per share.

Houston, TX-based Oasis Midstream is a master limited partnership. Its bottom line for 2018 is expected to surge more than 300% year over year.

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