LONDON: BP said on Wednesday that it will write off $1.08 billion (784 million euros) in costs from a failed Brazilian well, but revealed a "significant" discovery in the deepwater Gulf of Mexico.
The British energy giant added in a statement that "momentum" was returning to its operations in the Gulf of Mexico, in the wake of the 2010 oil spill catastrophe.
"The BP-operated Pitanga exploration well on Block BM-CAL-13, in the Camamu-Almada basin offshore Brazil, had encountered oilshows but no commercial quantities of oil or gas," it said, adding it will relinquish the block.
The London-listed energy major revealed that $850 million of the $1.08 billion charge related to the value of the BM-CAL-13 block, while the remainder reflected the cost of drilling.
In 2010, the British company had purchased various assets in Azerbaijan, Brazil and the Gulf of Mexico, from US firm Devon Energy for $7 billion.
"The Pitanga well result will trigger a write-off of around $230 million related to the costs of drilling the well, as well as a write-off of around $850 million associated with the value allocated to this block as part of the acquisition accounting related to the Devon deal, which BP expects to treat as a non-operating item," it added on Wednesday.
BP added that the "significant" discovery at its Gila prospect, which it co-owns with ConocoPhillips, was located 300 miles southwest of New Orleans in 4,900 feet of water.
The group said that appraisal drilling was required to determine its size and commercial value.
"The Gila discovery is a further sign that momentum is returning to BP's drilling operations and well execution in the Gulf of Mexico," added Richard Morrison, regional president of BP's Gulf of Mexico business.
Despite the Brazilian well closure, BP added that 2013 has been the most successful year in new field exploration for almost a decade, with 15 completed wildcat exploration wells.
This has resulted in seven potentially commercial discoveries, giving a new field exploration success rate of over 40 percent.
"Exploration is at the heart of BP's upstream strategy," added Lamar McKay, boss of BP's upstream division, in the statement.
"The successes and opportunities now being delivered through our increased exploration activity confirm our confidence inour ability to sustain BP's resource base.
"This success is being mirrored in improved operating performance delivery across BP's upstream business."
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