BPX Energy is the U.S. onshore oil and gas unit of BP (British Petroleum), primarily focusing on shale production. The company was formed after BP’s acquisition of BHP Billiton’s onshore oil and gas assets in 2018 for $10.5 billion. BPX Energy operates in some of the most productive U.S. shale basins, including the Permian Basin, Eagle Ford Shale, and the Haynesville Shale.
Kyle Koontz is the new CEO of BPX Energy, BP’s U.S. onshore oil and gas division. He took over the role after previously serving as BPX’s Vice President for Development, where he played a critical role in overseeing BPX’s growth strategy and operational excellence in drilling and completions. Koontz has been with BP since 2016 and has been instrumental in transforming BPX’s onshore operations, particularly following BP’s acquisition of BHP Billiton’s U.S. onshore assets.
What did he say about the Permian?
Kyle Koontz provided several key insights regarding BPX’s operations in the Permian Basin:
- Capital Allocation and Growth: The Permian has the largest capital allocation within BPX’s portfolio. BPX is currently in growth mode in the Permian, moving beyond lease-obligation drilling to focus on production growth. The company is drilling significantly faster, which has allowed them to reduce the number of rigs while maintaining the same level of output.
- Infrastructure Development: BPX has invested heavily in building out the field infrastructure in the Permian. Koontz highlighted that they’ve constructed three central facilities, with the third one, called Checkmate, recently brought online. These facilities are part of a multi-year strategy to optimize the field’s development. They also built out their own gathering system and electrified the field to maximize flow assurance, reliability, and reduce emissions.
- Rig Efficiency: BPX planned to run five rigs in the Permian but dropped to four due to the increased drilling speed and efficiency. They are now achieving the same footage with fewer rigs, showcasing operational improvements.
- Electrification: Koontz discussed BPX’s electrification efforts in the Permian, where nearly 95% of the well sites are now electrified. This reduces emissions and enhances operational reliability. BPX is using electric fracturing fleets and drilling rigs that run on electricity, leading to significant efficiency gains and lower environmental impact.
- Flaring Reduction: Koontz noted that BPX has almost eliminated routine flaring in the Permian. New well sites have no flares, and older sites have been retrofitted to capture low-pressure gas, which is now sent to central delivery points (CDPs) for processing and sale.
- Future Compression Project: The final major infrastructure project, a compression station called Crossroads (formerly Royal Flush), is in development. This facility will help handle the increasing gas-to-oil ratio as reservoir pressure declines and more gas is produced.
Koontz emphasized that BPX is optimizing every aspect of its operations in the Permian, aiming to squeeze as much value as possible from each investment while focusing on sustainable growth and emission reductions.
What did he say about the Eagle Ford?
Kyle Koontz expressed significant enthusiasm for BPX’s operations in the Eagle Ford. He highlighted the following key points about the play:
- Acreage Position: The Eagle Ford represents a large part of BPX’s portfolio, with approximately half a million acres, which is much larger compared to their roughly 80,000 acres in the Permian Basin.
- Commodity Windows: The Eagle Ford offers diverse opportunities due to its multiple commodity windows, including oil, gas, rich gas, and condensate. This variety allows BPX to produce effectively across different zones, with strong deliverability across the board.
- Capital Allocation: BPX has been shifting capital from some of its gas assets in the Eagle Ford to more oil-weighted assets, especially given the current market trends. This reflects their strategy to capitalize on the favorable oil market.
- Long-Term Potential: Koontz sees a “ton of runway” in the Eagle Ford, indicating that there is significant potential for continued growth and development in this area.
Overall, Koontz is very optimistic about the Eagle Ford, considering it a critical part of BPX’s future growth strategy, with a focus on leveraging the high-quality rock and diverse production capabilities of the region.
