BHP lines up exploration licences with $859m bid

BHP has won the bids to acquire a full ownership and operatorship of exploration licences for two oil blocks in the offshore Orphan Basin in Eastern Canada.

This will be BHP’s first petroleum operation in Canada.

BHP president operations, petroleum, Steve Pastor said the successful bids placed BHP as an early mover in exploring world-class conventional oil assets in the region.

“This frontier opportunity has large oil resource potential, which we identified through our global petroleum endowment study in 2016 and is in a low risk country with competitive fiscal terms,” Pastor said.

“This opportunity delivers on our exploration focus in conventional petroleum and will leverage our global deep-water development and operational expertise.”

The company has submitted an aggregate bid amount of $US625 million ($859 million), which covers the drilling and seismic work over six years. BHP’s minimum commitment under the licence agreements is $US157 million.

BHP plans to spend a capital expenditure of $US140 million for oil blocks 8 and 12 up to the 2021 financial year, which is within BHP’s exploration budget.

The company has until the 2022 financial year to decide whether it would like to move beyond the initial phase and further its capital expenditure to drill the first appraisal well.

The licences are expected to be issued by the Canada Newfoundland and Labrador Offshore Petroleum Board in December 2018 and would be effective in January 2019.

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