BP plc, still coming to terms with the devastating Macondo well blowout two years ago, said last week it would sell one Gulf of Mexico (GOM) field and stakes in four others.

The five fields yielded a total of about 55,000 boe/d in production during 2011, said CFO Brian Gilvary, who spoke with financial analysts during an earnings conference call on Tuesday. Although Gilvary did not provide an estimate of how much BP hoped to make from the sales, the proceeds would be added to BP divestments that now total almost $23 billion since 2010, he said.

Included in the sale is BP’s 100% owned and operated Horn Mountain, a truss spar that is in Mississippi Canyon blocks 126 and 127 about 84 miles east of Venice, LA. The system is able to process about 68 MMcf/d of gas and 65,000 b/d of oil.

Also to be sold is Holstein, BP-operated (50%) and jointly owned with Royal Dutch Shell plc, in Green Canyon Block 645. The development is able to process up to 110,000 b/d of oil and 150 MMcf/d of gas, which is transported via the BP-operated Caesar oil pipeline and Cleopatra gas pipeline systems. Marlin, in the Viosca Knoll Block 915, is to be sold; it is part of a BP-operated hub system and tension leg platform that processes up to 250 MMcf/d of gas and 40,000 b/d of oil. BP has a 75% interest; Shell owns a 25% stake.

Also to be sold is BP’s one-third interest in ExxonMobil Corp.’s Diana Hoover project, as well as a 31% stake in the Shell-operated Ram Powell field.

The London-based producer “remains on track to start up six…major new upstream projects in 2012,” including Galapagos in the GOM, with an expected start up by the end of June. The company also is progressing on phase two of its massive Mad Dog platform in the deepwater; a final investment decision is expected next year, Gilvary said.

Five deepwater rigs are operational on BP-operated fields, with two now drilling appraisal wells and two producing. BP expects to have eight rigs operating in deepwater before the end of the year, which would be more than it had in the deepwater pre-Macondo. BP is the largest leaseholder in the GOM deepwater with more than 650 leases in water more than 1,250 feet deep.

“We will be seeing higher levels of activity in the Gulf of Mexico later this year with the most rigs we’ve ever run,” said Gilvary. “We are ramping up activity and hiring people. Most of our activity is on track.”

BP underperformed its peers in 1Q2012, mostly because it has been selling a long list of assets in the past 24 months to pay for the GOM damages, which in turn has cut into not just profits, but into production levels, he noted.

Through billions of dollars in asset sales BP now is financially stable to withstand costs from Macondo-related issues and litigation, but the producer will need time to recapture gas and oil output lost that eventually will be recaptured in new projects and from new assets — such as the recent acquisition in the Utica Shale (see NGI, April 2).

CEO Bob Dudley stressed that BP remains focused on “value” over “volumes,” a strategy unveiled last year when the company reached an “operational turning point” (see NGI, Oct. 31, 2011). However, in a staff e-mail, the CEO said the divestments had taken a toll on output, along with industry cost inflation.

Net profits fell to $5.92 billion in 1Q2012 from $7.25 billion in the year-ago period. Revenue jumped to $96.7 billion in the latest period, versus $88.44 billion for the same period of 2011. BP’s clean replacement cost profits (adjusted costs), which strip out gains/losses from inventories and other nonoperating items, fell 12.8% year/year to $4.8 billion from $5.5 billion.

Overall production fell 3% from a year ago to 3.47 million boe/d from 3.58 million boe/d. However, looking back to the first quarter of 2010 — the last period before the Macondo failure — BP produced 4.01 million boe, which was 13.4% more than the latest quarterly production figures.

BP last week won preliminary approval for an estimated $7.8 billion settlement to resolve more than 100,000 court claims stemming from the Macondo well blowout, which killed 11 men after destroying the Deepwater Horizon rig servicing the well. The proposed accord was reached in early March between BP and the Plaintiff’s Steering Committee (PSC) to resolve most of the “legitimate economic loss and medical claims” (see NGI, March 12). The PSC has acted on behalf of individuals and businesses in multi-district litigation (MDL) proceedings pending in New Orleans (MDL 2179).

In separate rulings U.S. District Judge Carl Barbier in New Orleans ruled in favor of an agreement for economic and property claims, as well as one for medical claims (In re: Oil Spill by the Oil Rig “Deepwater Horizon” in the Gulf of Mexico, on April 20, 2010, U.S. District Court, Eastern District of Louisiana, No. 10-md-02179). The ruling allows the oil spill class action lawsuit to proceed.

The proposed settlement is “fair, reasonable, adequate, entered in good faith, free of collusion and within the range of possible judicial approval,” Barbier said after granting preliminary approval. A fairness hearing is scheduled for Nov. 8 to consider a final settlement, despite a BP request to delay a trial on liability for the two-year-old spill.

BP’s agreement to pay for economic losses, property damages and injuries does not cap the amount, which may increase based on the number of claims filed by the victims. The agreement also does not include any federal or state claims, nor does it include criminal or civil penalties that may result from investigations. Those harmed by the deepwater drilling moratorium also are not part of the settlement agreement. Spill victims were allowed to opt out of the settlement and file separate lawsuits against BP.

Those “who opt out or who possess reserved claims will be able to pursue those claims effectively outside” the settlement under the terms of the agreement, Barbier said.

©Copyright 2012Intelligence Press Inc. All rights reserved. The preceding news reportmay not be republished or redistributed, in whole or in part, in anyform, without prior written consent of Intelligence Press, Inc.