Member Info for Exploration

Dr P

Good points.

I’m surprised no-one comments on the ‘methane from rubbish dump’ project. `According to BP it produces 4 mmscfd of gas which is used to generate power at the site. That’s only 20 MW. And how are ‘reserves’ assessed? Is more landfill needed to make more methane? What are the commercial characteristics of this project? If it is attractive, why aren’t there hundreds of similar plants all over the world?

More recently buried waste will produce more gas than older waste. Landfills usually produce appreciable amounts of gas within 1 to 3 years. Peak methane gas production usually occurs 5 to 7 years after wastes are dumped. Almost all gas is produced within 20 years after waste is dumped; however, small quantities of gas may continue to be emitted from a landfill for 50 or more years. A low-methane yield scenario, however, estimates that slowly decomposing waste will produce methane after 5 years and continue emitting gas over a 40-year period. Different portions of the landfill might be in different phases of the decomposition process at the same time, depending on when the waste was originally placed in each area. The amount of organic material in the waste is an important factor in how long gas production lasts. The takeaway is that to create a material business BP needs many landfill gas projects.

https://www.epa.gov/lmop/landfill-gas-energy-project-development-handbook

Likewise, the wind disaster offshore USA. A $500 million write off. Even the Mukluk exploration well in Alaska (‘most cost dry hole in history’) was a $340 million write off (in 1980 money). At the time, between the decision to drill and the actual drilling, there was evidence that the well would fail - but no-one had the courage to intervene.

And that looks to me how BP has stumbled into a series of strategic blunders, egged on by consultants, but lost the ability to say ‘no’ to some projects, with a dysfunctional leadership which took its eye off the ball. Ethics and compliance suffered from weak management with inevitable results. Quite how the Board managed to let this happen is probably an example of ‘groupthink’.

But you are right, a change of course is needed before it’s too late and not surprisingly depends on the appointment of a new CEO with the courage to renew the leadership team, enjoy support from the Board and inspire the markets.

FD - you’re right about how gas no longer needs gas holders to maintain pressure. The way NTS looks at their pipeline network it is actually stored gas or ‘linepack’. Maintained at specified pressure and temperature ready for sale and delivery.

Decommissioning the NTS pipeline system would be similar to decommissioning railways and motorways.

Report link below says what we all know. About time for a clear out of BP’s strategy leadership and their fancy buzzwords

https://www.fool.co.uk/2023/10/23/will-the-next-bp-ceo-convince-me-to-buy-more-of-this-dividend-stock/

Will this make a difference. https://www.bp.com/en/global/corporate/careers/jobs-at-bp/Head-of-Culture-Activation-RQ070509.html

Clean Shaven

On September 20th there was the 29th anniversary of signing of the agreement in Baku to develop the ACG oilfield in the Caspian Sea. The event was attended by John Browne representing BP standing in for the current CEO. Also there was Gordon Birrell who is seated on left of shot in video below.

Birrell has shaved off his beard, perhaps intending to step up to the top job?

https://video.azertag.az/en/site/video/186715

MarkGo

The business correspondent of the Sunday Times, Oliver Shah, wrote an article about BP yesterday - its on page 7. For those unfamiliar with Shah’s work one of his best books is ‘Damaged Goods’ which explained in graphic detail how a tycoon ran BHS.

No doubt Shah will be accumulating material for another best seller - this time about BP.

Aside from alleged misconduct by the previous CEO, investors familiar with BP will have sensed a breakdown of BP’s ESG performance. The ‘E’ part appears confused, the ‘S’ part is ignored and ‘G’ is suspect in terms of dealing with day-to-day personnel issues.

Now, BP’s Board is faced with recommending severance terms for the departed CEO. Shareholders and the market will hold them accountable for getting it right. With high powered lawyers involved on all sides the story is only just beginning and will be a distraction for months to come.

For the moment, the stand-in CEO is saying ‘business as usual’ - well, what else can he say? Institutional shareholders will be calling the shots over a dysfunctional board.

With no-one at the controls in London or USA our investment is becoming a leaderless shambles - and the market knows it.

Pre-Looney BP was in the same class as Exxon and Shell. Today, the ‘cult of net zero’ grabs the attention of BP’s management completely so that they cannot think of anything else.

It all smells of creative destruction of a highly respected, profitable company in the pursuit of an impossible dream conjured up on flip charts with help of pricey consultants. To have caused so much damage in such a short time is quite an achievement.

Strategy? Requires Implementation and Outcomes which can be compared with competitors. The next CEO must reset BP’s strategy PDQ to restore confidence with investors. Heads will roll for sure. In the Looney years BP has created a hotch potch of low-return activities like grocery shops and car parks with few measurable performance indicators.

Is BP a supermarket like Tesco? Is BP a utility company with power plants? Is BP a property developer salvaging value from clapped out petrochemical plants? Is BP venture capital company trying to transform wood into gold? Is BP the nation’s preferred car park operator?

It all smells of creative destruction of a highly respected, profitable company in the pursuit of an impossible dream. Fortunately for the current strategists, BP’s upstream business is paying their salaries and shareholders dividends while they blather on about net zero.

McKinsey rumoured to be working flat out for new CEO on new strategy.

A spokesman, who insisted on anonymity, says its just a mater of changing one letter. Instead of ‘net zero’ - it’s ‘not zero’ - easy to understand.

Here we go again -

The fundamental rule about a corporate crisis is to recognise there actually is a crisis in the first place.

In the Looney case BP’s Board were ‘asleep at the wheel’, even though a lot of staff seemed to know what was going on.

I seems that one of the ‘colleagues’ in the relationship decided to blow the whistle and precipitate recent events.

But who are these ‘colleagues’? How did they benefit? What are their current roles and responsibilities? Will they stay in their posts? They’re not victims, but are part of the problem.

Shareholders need to know. Otherwise the 2034 AGM will be a 5hit 5how of motions of no confidence in how the Board governs our investments.

Https://youtu.be/fC0zvefXfeQ?si=1JvdhAXwg9F4AIdF

Thanks Markgo

Just to clear up your assertion. I have invested in BP since 1975 and hold over 100,000 shares. I know BP pretty well having worked there for >40 years and have seen the metamorphosis of the industry.

The discussion recently was prompted by ‘share price’ and there is simply no way the reproduce the spectacular returns of the 80s & 90s with organic growth in what are essentially utility industries with numerous competitors.

No amount of flashy corporate BS can replicate super-normal profits of exploring/producing oil and gas.

On the other hand, BP is believed to be banking on a big deal with Abu Dhabi to be unveiled at COP28 in front of heads of government. The inside story is about huge investment in charging network of the UK. Knighthood for Looney - but not his idea. The brains belong to Bob Dudley who incubated the idea some years ago and laid the roadmap for BP to follow.

That kind of deal is big enough to boost the share price - not a few wind farms

As a growth investment the investment community has seen through BP’s -inventing energy’ fantasy.

For example, let’s imagine BP without its E&P, Trading and Refining business. What would a few wind farms be worth in DCF terms? Just utility rates of return only loosely linked to oil price.

The whole house of cards create by the current leadership comprises an overpaid, top heavy head office populated by management consultants and ‘communications’ people spinning plates.

They think it’s all over, etc,etc,etc

Wakes, wakey slights -the transaction you posted took place on 26 November 2012. What a plonked!

Meoryou

BP’s defined benefit scheme closed some years ago. Employees receive a 15% cash uplift in their salaries now to spend as they wish or pay into a DC Pension scheme.

On the Pensioner’s ‘revolt’. BP runs many pension schemes in numerous jurisdictions all over the world. It’s track record in places like Turkey or Zimbabwe is abysmal despite local campaigns aimed at ‘BP London’ to help local pensioners.

But in UK Looney has made a big error of judgement and antagonised 60,000 UK pensioners by cutting discretionary, inflation related increases by 11% over the last two years in real terms, despite recommendations for increases from the Trustees.

The average BP pension in the UK scheme is £20,000, so the cut amounts to over £2000 per year when these same pensioners are trying to pay for petrol and gas which contributes to BP’s bumper profits. Perverse or what?

So this time, Looney’s social media, carefully choreographed image of a poor Irish farm boy who has worked his way to the top and paid £10 million a year is disintegrating. He has three full-time ‘communications’ people just working on his social media accounts.

The current pensioners ‘revolt’ campaign is run by a group of ex-BP executives with extensive legal, commercial and external affairs experience. Over 150 MPs have been contacted with serious questions now aimed at Looney by UK Parliament.

On the BP side the CFO may be ‘fattening-up’ the UK Pension Fund, which has a multi-billion £surplus, to transfer it to an insurance company which is how things are nowadays.

But guess what? Any actuarial surplus after a buy-out goes to BP P&L account and may even boost Looney’s bonus. Does that seem morally fair?

Probably ‘yes’ if you’re a hedge fund. But ‘no’ if you’re a BP employee being spoon fed company propaganda about how BP cares for people when everyone knows it’s an illusion.

As a shareholder I expect a much higher standard of leadership at BP to support the value of my shares rather than the stooges created by management consultants.

Meoryou

They’re losing the plot under Looney - complete twerp.

Apparently Looney is flogging the pension fund to prop up the financials. But he’s running into trouble caused by a group of very experienced ex-BP deal-makers challenging his plan.

I posted some of this a few days ago.

BP is a rather dull share today compared with the past when it regularly hit the headlines around the world with big oil and gas deals in the 1990s under John Browne’s leadership. On the negative side tens of $billions were wiped off the value of BP under his successor’s reign.

With even the biggest wind turbines rating at 10 MW ‘organic growth’ is slow and, in energy terms, is roughly same as 2 or 3 mmscfd of gas being burned in a turbine generator. So wind, important as it is, becomes BP’s ‘organic growth’ option - glacially slow.

But really exciting, transformational deals take years to mature and become engineering reality. No-one seems to have noticed the moves BP started making under the leadership of Bob Dudley aimed at fast-tracking the transition from oil. Rumours persist such a move could be enabled by an alliance between BP and the United Arab Emirates and perhaps announced at the COP28 meeting in early December.

This deal has been gradually taking shape for more than two years, still with input from Bob Dudley I suspect while the day-to-day chore of running BP are left to the UK team. More recently we’ve seen BP/ADNOC team up to buy into NewMed and BP/SOCAR make a joint bid to explore for gas offshore Israel. The eastern Mediterranean gas play is part of the Nile Delta petroleum province where BP has a commanding position in Egyptian waters.

https://www.bp.com/en/global/corporate/news-and-insights/press-releases/bp-adnoc-and-masdar-to-form-strategic-partnership-to-provide-clean-energy-solutions-for-uk-and-uae.html

More recently, Bernard Looney posted support for UAE. See below.

“It’s just over four months until the United Arab Emirates hosts COP28. And today, COP President Dr Sultan Al Jaber set out his ambitious agenda – which resonated strongly with me and at the team here at bp.

Perhaps most striking for me was his emphasis on fast-tracking the transition – with a laser-focus on building the energy system of the future, while rapidly decarbonising the energy system of today.

Dr Al Jaber also talked about the need to fix climate finance, focus on people, lives & livelihoods – while underpinning all that with full inclusivity.

It was a great speech. And we look forward to supporting the UAE as it prepares for the transformative COP28 UAE we all hope this will be.”

Quite what form a BP/UAE deal might take remains to be seen, but it is likely to be big and involve presidents and prime ministers - just like BP of the 1990s

Bob Dudley is Chairman of OGCI, which includes CEOs of all major oil companies. OGCI’s office is in London.

https://www.ogci.com/who-we-are

From start of Bernard Looney becoming CEO of BP I was surprised how he waded into the ‘transition’ story so quickly, reduced interests in oil, such as Angola, but now it’s clearer that there was a bigger plan which had been incubating for years.

Starmer, Sun

Thanks - Bob Dudley is Chairman of OGCI, which includes CEOs of all major oil companies. He’s also on the board of COP28

OGCI’s office is in London.

https://www.ogci.com/who-we-are

From start of Bernard Looney becoming CEO of BP I was surprised how he waded into the ‘transition’ story so quickly but now it’s clearer that there was a bigger plan which had been incubating for years.

Starmer, Sunak and the rest will be scrambling to claim victory, just like Blair did by hosting signing of big BP oil and gas deals at 10, Downing Street.

New, big deal on the way?

BP is a rather dull share today compared with the past when it regularly hit the headlines around the world with big oil and gas deals in the 1990s under John Browne’s leadership. On the negative side tens of $billions were wiped off the value of BP under his successor’s reign.

With even the biggest wind turbines rating at 10 MW ‘organic growth’ is slow and, in energy terms, is roughly same as 2 or 3 mmscfd of gas being burned in a turbine generator. So wind, important as it is, becomes BP’s ‘organic growth’ option - very slow.

But really exciting, transformational deals take years to mature and become engineering reality. No-one seems to have noticed the moves BP started making under the leadership of Bob Dudley aimed at fast-tracking the transition from oil/gas. Rumours persist such a move could be enabled by an alliance between BP and the United Arab Emirates and announced at the COP28 meeting in early December.

This deal has been gradually taking shape for more than two years, still with input from Bob Dudley I suspect while the day-to-day chores of running BP are left to the UK team.

https://www.bp.com/en/global/corporate/news-and-insights/press-releases/bp-adnoc-and-masdar-to-form-strategic-partnership-to-provide-clean-energy-solutions-for-uk-and-uae.html

More recently, Bernard Looney posted support for UAE.

“It’s just over four months until the United Arab Emirates hosts COP28. And today, COP President Dr Sultan Al Jaber set out his ambitious agenda – which resonated strongly with me and at the team here at bp.

Perhaps most striking for me was his emphasis on fast-tracking the transition – with a laser-focus on building the energy system of the future, while rapidly decarbonising the energy system of today.

Dr Al Jaber also talked about the need to fix climate finance, focus on people, lives & livelihoods – while underpinning all that with full inclusivity.

It was a great speech. And we look forward to supporting the UAE as it prepares for the transformative COP28 UAE we all hope this will be.”

Quite what form a BP/UAE deal might take remains to be seen, but it is likely to be big and involve presidents and prime ministers - just like BP of the 1990s

Penguins

Anyone with experience in basic petroleum geology realises UKOG’s ‘assets’ are subject to shortcomings in one way or another.

In fact, the last thing UKOG wants to do at Loxley is actually drill a well - it’s worth more to hype what might be discovered (probably nothing) rather than face the music with a dry hole.

If you recall the sudden abandonment/relinquishment of the Arreton ‘flagship’ prospect, Isle of Wight council took advice from a petroleum geologist who noted UKOG was planning to drill a well at the same location where two dry holes had already been drilled! So they confidently rejected the planning application, burst the bubble of hype created to justify drilling and, indirectly, booted UKOG off their island, knowing that an appeal would expose UKOG’s tactics.

If SCC had adopted the same approach the Loxley ‘illusion’ could have been shattered at an early stage by illustrating its probably an artefact of erroneous seismic static corrections. It’s a real life ‘Emporers Clothes’ story for UKOG’s management. That’s why they will never drill at Loxley.

Dr P

You won’t get much news from Deltic.

Celtic gave away 30% to 40% of its interests in the Capricorn licences in return for a 3D seismic survey which wrote off the Plymouth prospect. Capricorn is now Operator and controls press releases.

Same press story with Selene and Pensacola where Shell is operator and their continued presence in UKCS uncertain.

It’s all rather sad and Deltic unable to say anything.