A Giant Gusher in the Gulf of Mexico

BP (NYSE: BP  ) today stands for Be Proud -- proud of a "giant" new discovery in the deepwater Gulf of Mexico.

The supermajor's Tiber Prospect was drilled in Keathley Canyon, a section of the offshore frontier that's been firing imaginations since BP, along with Anadarko Petroleum (NYSE: APC  ) and Devon Energy (NYSE: DVN  ) , made the Kaskida discovery there in 2006. The Tiber discovery follows Chevron's (NYSE: CVX  ) success earlier this year with its Buckskin prospect, also in Keathley Canyon.

The buzz from BP, which didn't release any figures other than the well's water depth and total drilling depth (4,132 feet and 35,055 feet, respectively), is that Tiber is bigger and better than Kaskida. The latter is estimated to contain at least 3 billion barrels of oil in place, with perhaps 500 million barrels recoverable. That's got analysts at UBS thinking that Tiber recoveries will fall in the range of 500 million to 1 billion barrels.

That sounds like a serious haul, but we have to remember what a behemoth BP is. Even if the company's 62% stake (minority partners are Petrobras (NYSE: PBR  ) at 20% and ConocoPhillips (NYSE: COP  ) at 18%) is worth $1.9 billion, as ballparked by Goldman Sachs (NYSE: GS  ) , that barely moves the needle for the $164 billion company. My Foolish colleague David Lee Smith was absolutely correct in his assessment that BP is becoming a shining star in the deepwater. However, there are companies out there with more discovery upside.

While they won't see a dime from Tiber, the companies that may have the most to celebrate today are Anadarko and Devon. Both independents, of much more modest stature than BP, have plenty more prospects in the Keathley Canyon area. Devon, in particular, should be pleased as punch, because it's currently seeking a partner to help shoulder the cost of its pricey deepwater program. The Tiber discovery ought to send more suitors to its door.

Petrobras is a Motley Fool Income Investor recommendation. Dive deep into our dividend-focused newsletter free for 30 days.

Fool contributor Toby Shute doesn't have a position in any company mentioned. Check out his CAPS profile or follow his articles using Twitter or RSS. The Motley Fool has a disclosure policy.


Read/Post Comments (0) | Recommend This Article (8)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 976705, ~/Articles/ArticleHandler.aspx, 10/24/2014 2:22:49 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement