BP PLC (LSE:BP.) could take lessons for its big new Brazil oil discovery from Galp Energia's experience in Namibia, according to Citi.
Galp’s sell-down of its Mopane discovery, with TotalEnergies acquiring a 40% stake in the exploration block and taking over as operator, failed to realise the value analysts had anticipated, which Citi attributes to Galp’s lack of a fallback option to develop the asset independently, forcing it to accept less favourable terms.
By contrast, Citi argues BP is in a stronger strategic position after the August announcement of its largest oil discovery in 25 years.
The company has the tools, operational capability, and scale to develop its Brazilian acreage itself if necessary, giving it more flexibility in how it approaches potential partnerships or asset sales.
This optionality, Citi said, could allow BP to pursue a more favourable pathway to maximise net present value from its Brazilian exploration portfolio.
Back in the summer, the FTSE 100 group revealed that a well drilled at the 100% owned Bumerangue block, around 400 miles offshore Rio de Janeiro, penetrated a hydrocarbon column of around 500 metres, with an estimated areal extent greater than 300 square kilometres.
BP said at the time that it aims to "explore the potential of establishing a material and advantaged production hub" in the country.