BHP has won rights for two exploration licenses in the offshore Orphan Basin in Eastern Canada with a successful bid amount of $625m in an auction held by the Canada-Newfoundland and Labrador Offshore Petroleum Board (C-NLOPB).


Image: BHP bags rights for two Orphan Basin blocks in Eastern Canada. Photo:courtesy of suwatpo/

The two Orphan Basin licenses won by BHP are blocks 8 and 12, in which it will have 100% participating interest and operatorship.

BHP’s total bid amount covers the drilling and seismic work needed by the exploration work programs under the license agreements through the six-year term. The minimum commitment for the Australia-based resources company under the license agreements of the Orphan Basin blocks is for $157m.

If the company decides to advance the exploration program beyond the initial phase, then a decision regarding further capital expenditure for the drilling of the first appraisal well is likely to be made in FY2022.

The initial planned capital expenditure on the exploration work programs on the two Orphan Basin licenses is $140m up to FY2021, which BHP says is inside its current exploration budget.

BHP operations petroleum president Steve Pastor said: “This frontier opportunity has large oil resource potential which we identified through our Global Petroleum Endowment Study in 2016 and is in a low risk country, with competitive fiscal terms.

“This opportunity delivers on our exploration focus in conventional petroleum and will leverage our global deep-water development and operational expertise.”

Block 8 in the Orphan Basin spans 269,799 hectares and was won with a successful bid of C$621m ($474m) by the company’s subsidiary BHP Billiton Petroleum. On the other hand, Bock 12, which spans 273,579 hectares was won with a bid of C$201m ($153.4m) by the same company.

Recently, BHP completed a previously announced $10.5bn sale of its US onshore oil and gas assets to British oil and gas major BP. The sale included the company’s stakes in the liquids-rich regions of Eagle Ford and Permian basins and also in the Haynesville natural gas basin.

Prior to the closing of the deal with BP, the Australian firm had wrapped up the sale of its Fayetteville Onshore US gas assets to a subsidiary of Merit Energy for a sum of $300m.