BP PLC said Monday it had secured an agreement to sell its stake in the Bay du Nord oil project in Canada’s Flemish Pass Basin to operator Equinor ASA.
“The transaction is consistent with BP’s continued focus on portfolio simplification and disciplined capital allocation”, the British energy giant said in a statement.
The project, located about 500 kilometers (310.69 miles) off the coast of the province of Newfoundland and Labrador, includes 10 licenses in which BP is a stakeholder with a 37.21 percent average stake, the company said.
Norway’s majority state-owned Equinor said separately the transaction would give it 100 percent ownership of the project. It said it continues to target a final investment decision by 2027.
The Newfoundland and Labrador government announced March 3 it had reached an agreement with Equinor to progress the delayed project. The agreement allows the province to own a stake of up to 10 percent.
With initial estimated reserves of over 400 million barrels, Bay du Nord “represents a generational opportunity for Canada’s offshore – one that could open a new deepwater basin and shape the province’s energy industry for decades to come”, Equinor says on its website.
Discovered 2013, Bay du Nord has been paused since 2023. At the time, Equinor cited “changing market conditions and subsequent high-cost inflation”.
Under the agreement announced March by the province’s Mines and Energy Department, “[p]roject sanction is targeted for 2027, with first oil expected in 2031”. Under the 2018 “framework agreement” for Bay du Nord, initial production had been targeted for 2025.
The department noted Bay du Nord is the province’s first standalone offshore hydrocarbon development since Hebron and its first deepwater project.
“The project has advanced to front-end engineering and design, with continued work focused on strengthening capital efficiency, execution planning, and overall project robustness”, Equinor said Monday in announcing BP’s exit.
BP said, “BP will continue to hold 100 percent interest in two exploration licenses offshore Newfoundland and Labrador (EL 1166 and 1170)”.
“Related accounting impacts will be communicated as part of BP’s second quarter results”, BP said.
Cost Reduction
On July 1 BP’s reorganization from three segments into two – upstream and downstream – took effect.
“This organizational change builds on the concrete actions BP is taking to simplify its portfolio, reduce costs, maintain tight capex discipline and strengthen its balance sheet – all in service of growing value and returns for shareholders”, BP said in a statement June 9.
Meg O’Neill, chief executive since April, said, “Focusing BP around two distinct segments is an important step in accelerating delivery. It will reduce complexity and strengthen execution”.
Under the “reset” plan it announced February 26, 2025, BP targets $20 billion worth of divestments by 2027.
The plan also includes “structural cost reductions”, initially set at $5.5-6.5 billion by 2027. BP has increased that to $6.5-7.5 billion following a deal to divest its refinery and associated assets in Gelsenkirchen, Germany to Klesch Group.