TRUMBULL COUNTY, Ohio (WKBN) — BP has decided not to proceed with development plans for Utica shale drilling in Trumbull County after the results of its first-quarter financial results were released Tuesday.
BP Spokesman Curtis Thomas said four of the eight wells drilled were not producing the oil the company had hoped. The leases and buildings BP owns are now going up for sale.
“Just because this play didn’t make sense for us, doesn’t fit our portfolio, doesn’t mean it is not a good play for another oil and gas company,” said Curtis.
Between buying the leases and putting in the drills, BP pumped in nearly $1 billion into the Valley’s economy. Tom Humphries with the Regional Chamber of Commerce said the news of BP pulling out of the area is “disappointing.”
“Truthfully, I am not surprised,” said Humphries. “The rumor has been out for three or four weeks.”
Humphries said even though BP is leaving that does not mean the Shale boom is a bust. He said the focus now should be on making sure the infrastructure is installed for oil and gas companies that come in and take over where BP left off.
“I think the point is the gas and oil is still there it is just who is going to go get it. I think that is the issue that we are dealing with,” explained Humphries. “We do have to be concerned with getting then network in place so you can move it once you bring it to the well head. That network is being built as we speak.”
BP’s departure will have far reaching effects in the county. The oil company played a big role in local charities.
BP donated thousands of dollars to local organizations including a $100,000 grant to a STEM education program and $50,000 to Warren’s Inspiring Minds. They also donated smoke detectors to the Warren Fire department and donated livestock purchased at the Canfield Fair to local homeless shelters.
If and when BP does sell their leases, landowners will be contacted by the new owner.
The total cumulative net charge for BP’s Gulf of Mexico oil spill remains at $42.7 billion, excluding any provision for business economic loss claims that are not yet received, processed and paid, according to the release.
First-quarter financial results for the company include an underlying replacement cost profit for the quarter of $3.2 billion, compared with $2.8 billion for the previous quarter and $4.2 billion for the first quarter of 2013. Operating cash flow in the quarter was $8.2 billion.
The company also announced a quarterly dividend of 9.75 cents per ordinary share to be paid in June, 8.3% higher than a year earlier. As previously advised, the Board will continue to review the level of the dividend with the first and third quarter results each year.
BP Group Chief Executive Bob Dudley commented: “This is a very solid start to 2014. Operating cash flow was strong in the first quarter, we have seen further exploration success and upstream project start-ups, and the upgraded Whiting refinery is ramping up steadily. We remain confident of delivering our 10-point plan targets that we set in 2011 for delivery in 2014.”
BP is now nearing completion of its current $8 billon share buyback program, with $7.6 billion spent repurchasing shares for cancellation.
Dudley commented: “We expect material growth in operating cash flow, coupled with disciplined investment, to deliver sustainable growth in free cash flow. This will support increasing distributions to our shareholders. As well as progressive growth in the dividend per share, we expect to use surplus cash to support further distributions through share buy-backs or other mechanisms.”
Excluding Russia, underlying production was slightly lower than a year earlier, as higher output from new projects in the North Sea, Angola and Gulf of Mexico was offset by turnaround activity in Angola and lower production elsewhere. Reported production, excluding Russia, was 8.5% lower reflecting both the expiry in January of the onshore concession in Abu Dhabi and the impact of divestments.
Reported production, excluding Russia, is expected to be lower in the second quarter due to planned seasonal turnaround activity.
Eight exploration wells have been completed so far in 2014, including the Cobalt-operated Orca discovery in Angola and the BG-operated Notus discovery in Egypt. BP is on track to participate in at least 15 exploration wells over the full year. In the quarter, following the lifting of BP’s suspension and debarment by the US EPA, BP was the highest bidder on 24 new leases in the Gulf of Mexico, with final awards subject to regulatory approval.
Three new major upstream projects started production during the first quarter: Chirag Oil in Azerbaijan, Na Kika Phase 3 and the Shell-operated Mars B in the Gulf of Mexico. Production has also since begun from the Atlantis North Expansion Phase 2 development in the Gulf of Mexico and three further projects continue to make progress towards start up in 2014.
Active management of BP’s portfolio also continues with the agreement to focus BP’s activities in Alaska, divesting interests in four fields to Hilcorp, and BP’s plans to form a separate business to run its U.S. lower 48 onshore oil and gas assets. BP has decided not to proceed with the development of Utica shale assets in Ohio and earlier this month also announced the decision to halt processing at its Bulwer refinery in Australia.