Value-over-volume strategy working, BP America chairman says

Nick Snow

OGJ Washington Editor

WASHINGTON, DC, May 13 – BP PLC intends to continue following a strategy that emphasizes value over volume which it was forced to adopt to handle liabilities resulting from the 2010 accident and spill at its Macondo deepwater oil well in the Gulf of Mexico, BP America Inc. Chairman John C. Mingé said.

“I suspect all energy companies are undergoing a degree of re-examination,” he said in an address to the opening session of Deloitte LLP’s 2014 Washington Energy Conference on May 13. “Our strategy emphasizes value over volume, and tries to consider risk.”

BP’s decision to concentrate divestitures on non-exploration assets including most of its refineries and pipelines let it keep most of its reserves, Mingé said. It also forced the multi-national oil company to focus on risks and learn how to manage them, he added.

By the end of 2014, it expects to have completed $38 billion of divestitures, with another $10 billion of assets anticipated to be sold by the end of 2015, Mingé said. The company now can focus on its strategic strengths: finding and developing large fields, creating high-value chains, continuing its moves into deepwater exploration and development, and operating efficient refineries, he indicated.

BP consciously decided to create a separate division for its US unconventional production when it determined independent producers were more successful than majors because their relatively smaller size makes them more nimble and versatile, according to Mingé. The company also looked at ExxonMobil’s success with that approach after it bought XTO Energy, he added.

“I wish our [US unconventional] portfolio was a little more liquids-rich,” he conceded. “Drilling rigs and people don’t care whether they’re working on gas or oil. Liquids look good now, but more development of gas export facilities would provide us access to premium markets overseas.”

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