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BP and Chevron Hit Oil in Deepwater Gulf of America
04/16/2025
BP Targets 400,000 boe/d in Gulf with New Discovery
BP has made a new oil discovery in the deepwater Gulf of America, signaling a renewed commitment to traditional energy resources as the company continues a high-profile strategic reset. The discovery comes amid BP's broader pivot away from rapid renewables expansion toward reinforcing its upstream oil and gas portfolio to meet investor expectations and improve financial performance.
The Discovery: Far South Prospect
BP, as operator (57.5%) alongside co-owner Chevron U.S.A. Inc. (42.5%), drilled the Far South exploration well in Green Canyon Block 584, located in the western Gulf of America approximately 120 miles off the coast of Louisiana. The well was drilled in 4,092 feet of water to a total depth of 23,830 feet.
The initial well and a sidetrack successfully encountered oil in high-quality Miocene-age reservoirs. Preliminary data suggest potentially commercial volumes of hydrocarbons, giving BP strong confidence in the find's viability.
"This Far South discovery demonstrates that the Gulf of America remains an area of incredible growth and opportunity for BP," said Andy Krieger, Senior Vice President for the Gulf of America and Canada. “Our Gulf business is central to BP’s strategy. We are focused on delivering more affordable and reliable energy from this region, building our capacity to over 400,000 barrels of oil equivalent per day by the end of the decade.”
Strategic Reset: From Renewables to Hydrocarbons
The discovery is especially significant in light of BP’s updated energy strategy, which was formally announced in February 2025. After investor concerns and underwhelming financial returns from its green energy ventures, BP has signaled a deliberate shift back to its fossil fuel core.
CEO Murray Auchincloss acknowledged that the company had moved “too far, too fast” away from oil and gas, calling BP’s initial confidence in rapid green energy expansion “misplaced.” Under the new plan, BP will now:
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Increase annual oil and gas investment by 20% to $10 billion.
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Reduce its renewable energy budget to $1.5–$2 billion annually.
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Scale back direct investments in wind and solar.
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Prioritize partnerships and capital-light approaches in clean energy.
BP is also targeting 2.3–2.5 million barrels of oil equivalent per day globally by 2030, with approximately 1 million barrels expected from the U.S. onshore and offshore regions, including the Gulf of America.
U.S. Gulf Remains Core to BP's Growth
The Gulf of America remains a critical area for BP’s upstream operations. The Far South discovery lies just 4 miles north of BP’s Constellation field, a testament to the basin’s dense network of prospects and infrastructure.
BP plans to drill 10–15 exploration wells in 2025, part of a broader ramp-up that includes around 40 wells globally over the next three years. The company has made over 40 discoveries in the last decade in locations such as Egypt, Trinidad, and now again in the Gulf of America.
The Gulf remains attractive for its infrastructure maturity, deepwater expertise, and relatively stable regulatory environment.
Financial Outlook: Reset for Returns
BP’s strategic overhaul also includes major asset divestments. The company plans to offload $20 billion in non-core assets—including a potential sale of its Castrol lubricants business—and redirect those proceeds toward shareholder returns, debt reduction, and high-yield hydrocarbon investments.
In its Q1 update, BP noted a 90,000-barrel daily production drop due to asset sales in Egypt and Trinidad. However, oil output overall is expected to grow, particularly in the Gulf of America and the UAE. Refining margins have improved slightly, averaging $15.2 per barrel in Q1 2025 versus $13.1 in Q4 2024.
Net debt rose by $4 billion in Q1 but is expected to stabilize due to seasonal inventory effects and bonus payments related to low-carbon divestments.
Betting Big on the Gulf
With its latest discovery, BP is reaffirming its commitment to deepwater oil and gas as the backbone of its future energy mix. While the company isn’t abandoning low-carbon entirely, its focus has realigned around profitability, upstream growth, and capital efficiency.
“Our strategy is to go where we can deliver the best returns for shareholders,” Auchincloss said recently. And with the Far South find, BP appears to be doubling down on the Gulf of America as a core engine for that growth.
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