The board of mining giant BHP Group PLC (LON:BHP) has agreed to stump up almost US$700mln to expand production at the BP PLC-led (LON:BP.) Atlantis oil project in the US Gulf of Mexico.
Last month, BP announced it had discovered further oil in the Atlantis field and that the total cost of developing the project would be around US$1.3bn.
READ: Redburn cuts valuations for three UK miners
BHP, which holds a 44% stake in the project with BP owning the rest, has agreed to put in US$696mln which will help fund a new subsea production system from eight new wells.
The expansion project is due to come online at some point next year and will boost production at the field by an estimated 38,000 barrels of oil equivalent per day.
“The Atlantis Phase 3 project provides a competitive opportunity to deliver on our strategy to grow resources in Tier 1 conventional deepwater assets,” said BHP president operations petroleum, Steve Pastor.
“The project will further expand the Atlantis field and will provide cost-efficient, near term volumes.”
Another well to be drilled at Trion
In the same statement, BHP also confirmed it is to spend US$256mln to fund additional drilling at the Trion field in Mexico later this year.
FTSE 100-listed BHP owns 60% of the project, while the Mexican government-owned PEMEX holds the rest.
A further appraisal well at Trion, following the recent encouraging results at the 2DEL appraisal well, “reduces investment risk and adds value to this project,” added Pastor.
“If Trion is determined to be commercial, these funds will also provide an option to potentially accelerate development of Trion.”
BHP shares opened 0.7% higher at 1,742p on Wednesday morning.