BP Considers Forming Shale Joint Ventures Around U.S. Natural Gas Fields, Sources Say
(Reuters) - BP is seeking to form joint ventures around its U.S. onshore natural gas fields to expand production and cut costs as rival energy giants rush to scale up shale businesses, three sources with direct knowledge of the talks told Reuters.
London-based BP has held talks in recent weeks with several companies about tying up operations in the Haynesville shale gas basin, the three sources said.
BP is also considering creating joint ventures in the Eagle Ford basin, but the talks do not include its positions in the oil-rich Permian basin for now, two of the sources added.
The ventures could cover pieces of land of varying sizes, and would not have to be everything BP has within the basin.
The rapid growth in U.S. shale oil and gas operations over the past 15 years has upended global markets, turning the U.S. into a major exporter of energy.
But scale is key to maintaining low costs in the shale.
By growing the size of its operations as part of a joint venture, BP and its partners would be able to drill more, longer shale wells to increase output, while sharing costs between the parties.
A BP spokesperson declined to comment.
The push to grow has driven a wave of consolidation efforts among shale producers this year.
Just this month, Exxon Mobil and Chevron both announced plans to acquire rivals Pioneer Natural Resources and Hess, respectively, for a combined $113 billion, two of the largest mergers in the sector in decades.
By pursuing joint ventures, BP can achieve growth ambitions while avoiding spending billions on acquisitions. However, agreeing on the value of the combined assets and how to divide the venture's ownership are among the hurdles BP would have to clear with potential partners, the sources said.
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