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[LONDON] BP Plc expects to write off about US$750 million after deciding not to develop a natural gas discovery in Angola because it isn't commercially viable.
BP relinquished its 50 per cent interest in Block 24/11 off southern Angola, where the Katambi discovery was made in 2014, the company said in a statement Thursday. The write-off in the second quarter, which also includes other exploration charges in Angola, will not affect BP's cash flow, it said.
Oil companies are re-evaluating which projects to go ahead with as crude's three-year slump squeezes balance sheets . BP abandoned its search for oil in the Great Australian Bight last year and Royal Dutch Shell Plc gave up exploring in Alaska after it failed to find commercial quantities of oil.
"We are making disciplined choices throughout our business, including in exploration," Bernard Looney, chief executive officer for BP's upstream business, said in the statement.
"We are choosing not to pursue activities that we don't think will deliver maximum value for our shareholders."
In the Great Australian Bight off the country's southern coast, BP owned a 70 per cent stake in four blocks and Statoil ASA the remainder. Under a swap agreement, Statoil has taken over full ownership of two blocks and BP the other two. BP is in discussion with the Australian government on exiting its remaining blocks. BP plans to start seven projects this year, three off which have already begun production.
The new projects will help the company boost cash flow and reduce debt in the second half of the year, chief financial officer Brian Gilvary said last month. The explorer bought stakes in assets in the Middle East and Africa at the end of last year in an attempt to expand following years of reduced spending.