(BP) BP Plc Leases 84,000 Acres in Ohio

U.K. oil giant BP Plc (BP) intends to reap the benefits of an impending northeast Ohio oil and gas boom in the Utica/Point Pleasant shale formation, with an estimated recoverable potential of approximately 5.5 billion barrels of oil.

As part of this effort, BP has inked a deal with the Associated Landowners of the Ohio Valley (ALOV) – a body representing individual mineral owners in the region – to lease around 84,000 acres in Trumbull County, Ohio, a high potential formation in the region. Financial terms of the agreement were not revealed.

The Utica shale lies at a depth of about 6,000 feet. With a thickness similar to that of Marcellus and other attractive prospects, the formation is contemplated to be a substantial liquids-rich gas resource. The supermajor considers the lease deals to augment its American energy source portfolio.

According to the Ohio  Department of Natural Resources, the Utica Shale is estimated to contain recoverable oil in the range of 1.3 – 5.5 billion barrels and 3.8 – 15.7 trillion cubic feet of natural gas.

In 2012, BP plans to direct its efforts and resources towards studying the geology of the shale and formulate a strategy for the further development of the resource. Majors such as Chesapeake Energy Corporation (CHK), Anadarko Petroleum Corporation (APC) and Chevron Corporation (CVX) have already commenced exploration in the area.

BP recognizes its social commitment as well and plans to generate employment and make purchases locally, which would be beneficial in the long term.

Further, BP’s new strategy of active portfolio management, higher exploration activity with additional precautionary actions as well as refining and marketing repositioning will create value for shareholders. With a focus on a string of upstream activities, the company expects to bring 17 additional material upstream projects online, through 2014.

BP holds a Zacks #3 Rank, which translates into a Hold rating for a period of one to three months. For the long term, we maintain a Neutral recommendation on the stock.
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