Chevron takes control of BP deepwater discoveries

Chevron is expanding its deepwater oil portfolio by assuming control of multibillion dollar projects from rival BP as the UK company freezes wages and cuts spending in response to collapsing crude prices.

BP surrendered leadership of its Gila and Tiber oil discoveries and the Gibson exploration prospect in the US Gulf of Mexico to Chevron under an agreement that also gives the US company partial ownership of those assets. The deal underscores how stronger operators can benefit from new opportunities in the oil market downturn as rivals sell assets to raise cash and reduce costs.

BP, the second-largest oil producer in the US part of the Gulf, is retrenching worldwide after crude lost more than half its value in a seven-month rout. The drop in prices has eroded cash flow the company relies on to finance the highest dividend yield among the world’s largest energy explorers. Chevron is increasing investment in the deepest, most-challenging areas of the Gulf despite the collapse in global crude markets.

In Gila and Gibson, Chevron will own 36 percent, BP will retain 34 percent and ConocoPhillips holds 30 percent. BP and Chevron will each own 31percent of the Tiber field. Petrobras and ConocoPhillips will hold 20 percent and 18 percent, respectively.

BP discovered Tiber in 2009 and Gila in 2013. The UK company was a partner in Chevron’s discovery of the nearby Guadalupe discovery last year. Tiber, Gila and Guadalupe may all be hooked up to a single floating platform when it’s time to begin pumping oil and gas from the fields.