ConocoPhillips COP, a leading U.S.-based exploration and production player, has announced that it has agreed to acquire a 42% stake in BP Energy Company of Kirkuk Limited (BP ECKL), a subsidiary of the British energy major BP plc BP. The subsidiary is involved in the redevelopment of four large oil fields with producing wells in the Kirkuk region of Iraq. Through this partnership, COP will support the ongoing redevelopment efforts for these oil fields. The announcement mentioned that the agreement is anticipated to be signed during Iraq’s Prime Minister al-Zaidi's visit to Washington, D.C., in the United States.
BP ECKL operates under the Development and Production Contract (DPC), which enables it to develop and produce oil from the prominent Baba and Avanah domes of the Kirkuk oil field. The DPC also covers the Bai Hassan, Jambur and Khabbaz oil fields, all of which are currently producing. These fields have an estimated initial gross recoverable resource surpassing 3 billion barrels of oil equivalent (boe), highlighting significant resource potential.
The companies intend to recover these reserves via rehabilitation and upgradation of existing field infrastructure, redevelopment activities and optimization of field operations to improve efficiency. The joint venture project at the giant Kirkuk oil field is estimated to cost around $25 billion.
In addition to raising output from the existing fields, the contract area has exploration potential, suggesting the region may contain untapped oil and gas resources that could be developed later, supporting long-term production growth. The deal is expected to close by the end of 2026, pending necessary regulatory approvals and customary closing conditions.
COP believes that the oil fields included in this project are high-quality assets capable of generating attractive returns. The company’s CEO noted that this redevelopment opportunity aligns with ConocoPhillips’ disciplined approach to capital allocation, while providing exposure to a high-quality, long-life and large asset base that can benefit the company. The project leverages an existing production base, making it capital-efficient, while reducing execution risk and enabling it to generate returns faster. The deal will expand the company’s international portfolio of assets and is expected to boost its total production in the future. The company noted that the redevelopment of these large, established oilfields meets its low cost of supply criteria, while offering exploration upside.
Zacks Rank & Key Picks
ConocoPhillips and BP currently carry a Zacks Rank #4 (Sell).
Some better-ranked stocks from the energy sector are Par Pacific Holdings PARR and Valero Energy VLO. While Par Pacific currently sports a Zacks Rank #1 (Strong Buy), Valero Energy carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks Rank #1 stocks here.
Par Pacific Holdings operates an integrated downstream energy business across the United States, with fuel retail operations in Hawaii, Washington and Idaho, refining operations in Hawaii, Wyoming, Washington and Montana, and a supporting logistics network. Its refineries have a combined crude oil throughput capacity of 219,000 barrels per day and produce gasoline, diesel, jet fuel, marine fuels, asphalt and other petroleum products.
Valero Energy is a leading refining player with a robust network of 14 refineries located across the United States, Canada and Peru. The company has a combined high-complexity throughput capacity of 3 million barrels per day, which distinguishes it from other independent refiners. Valero’s refineries have a combined Nelson Complexity Index of 11.5, which implies that they can process a wide variety of feedstocks, convert it into higher-value products and shift product yields according to market conditions.
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BP p.l.c. (BP): Free Stock Analysis Report
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Valero Energy Corporation (VLO): Free Stock Analysis Report
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This article originally published on Zacks Investment Research (zacks.com).