Marking its biggest discovery in the past 25 years; plus highlights from Exxon's Q2 results call including CEO Darren Woods saying Permian shale oil production has not yet peaked.
Have you been to a Buc-ees gas station in Texas? If not, you need to experience one. We drove from Houston to Dallas last Thursday and were deeply impressed by the super-friendly customer service and famously clean restrooms. Each of the Buc-ees gas stations has between 80–120 pumps, including charging stations for EVs. I wonder how much competition the traditional gas stations are facing from Buc-ees.
In the meantime, let’s dig into a couple of energy news from the past week.
Shangyou Nie
Editor, Well Read
BP Makes Biggest Discovery in Quarter-century
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On 4 August, BP announced that it made a significant deepwater oil and gas discovery in the Santos Basin. It is the biggest discovery in the past 25 years for BP.
About the discovery:
According to BP, the discovery well 1-BP-13-SPS is located in the Bumerangue block in the Santos Basin, about 404 km offshore Rio de Janeiro.
According to local press, the well was spud in late May, using the DS-15 drillship, Rowan Renaissance, from Valaris.
The discovery well is situated at 2,372 m of water depth and drilled to a total depth of 5,855 m.
This first exploration well is located about 500m off the crest of the structure.
BP said the well “intersected the reservoir about 500 m below the crest of the structure and penetrated an estimated 500 m gross hydrocarbon column in high-quality pre-salt carbonate reservoir with an areal extent of greater than 300 km2.”
Reservoir rocks are high-quality carbonate, though with an “elevated level” of CO2.
According to Bloomberg, BP shares went up by 1.7 percent in London on the positive exploration news.
Background:
BP holds 100 percent in the Bumerangue block, awarded in 2022 during Brazil’s first acreage production licensing round.
BP said that the block has good fiscal terms, with 80 percent cost oil and 5.9 percent profit oil.
In total, BP holds 8 blocks offshore Brazil and operates 4.
According to BP, the latest discovery in Brazil is its 10th commercial discovery in 2025, after earlier discoveries in Trinidad (2), Egypt (2), Gulf of Mexico (Gulf of America, 1), Libya (1), Brazil (1), Namibia (1), and Angola (1).
BP used to be one of the industry leaders in global exploration, especially in deepwater in the Gulf of Mexico, Angola, and Azerbaijan.
25 years ago, BP made the Shah Deniz discovery in Azerbaijan with 2 billion barrels of oil and 35 trillion cubic feet of gas.
BP said that it wants to maintain its production target of 2.3–2.5 million barrels of oil equivalent per day.
With this and other discoveries and acquisitions of development assets, BP has the potential to increase production to 2035.
What they are saying:
“We are excited to announce this significant discovery at Bumerangue, BP’s largest in 25 years,” said Gordon Birrell, BP’s EVP for production and operations, in a statement.
“We are not overly concerned about the CO2 issue,” said Birrell during BP’s Q2 analyst results call on 5 August.
“This find may well see BP’s upstream-portfolio longevity extending well into the 2030s/40s,” said Irene Himona from Bernstein in her analytic note, according to Bloomberg.
What to watch next:
BP is conducting lab analyses on rock samples collected from the well
BP might have a “3-4 appraisal well” program, before going to the development planning stage, said Birrell during BP’s Q2 call.
One of the challenges BP will face is with the “elevated level” of CO2 in the discovery, which sometimes makes development more difficult and costly.
Would BP choose to hold onto 100 percent of the block or monetize some equity to help fund its other exploration programs, as ENI tends to do (i.e. to sell some equity from its exploration discoveries to get money for other exploration programs)?
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ExxonMobil CEO Says Permian Production Not Peaking Yet
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During ExxonMobil’s second quarter results call, CEO Darren Woods disagreed with the assessment that Permian shale oil production has peaked. His assessment is worth noting, as it contrasts with other recent assessments that US onshore oil production might have peaked in Q2.
What did Woods say?
During the Q&A session, Goldman Sachs’ analyst Neil Mehta asked, “Do you have a different view on peak oil production [already reached] across the basin in the Permian?” (starting at 16 minutes 30 seconds)
“You asked do we have a different view [on peak oil production], the answer is absolutely yes!” answered Darren Woods.
Woods used a baseball analogy – we are “long ball hitters, others play the short game.”
By 2030, ExxonMobil projects its Permian production will grow to 2.3 million barrels of oil equivalent per day, and possibly even higher with technology upside.
Woods thinks ExxonMobil can double its Permian production (to 3 million barrels of oil equivalent per day).
Highlights from ExxonMobil’s Q2 results:
Production is at 4.6 million boe per day, and is projected to grow to 5.4 million boe per day
ExxonMobil 2nd quarter earnings were $7.1 billion—ExxonMobil returned $9.2 billion to shareholders in Q2: $5 billion for share buybacks, $4.2 billion for dividends.
ExxonMobil is on pace to buy back $20 billion in 2025, having bought back 20 percent of the new shares issued to acquire Pioneer since May 2024.
ExxonMobil has an industry-leading balance sheet, with 8 percent net debt-to-capital ratio.
ExxonMobil is not interested in expanding to the power generation business, but is interested in helping to supply low-carbon data centers.
Background on peak crude production in the US:
In recent months, there have been published views by analysts and some in the industry (like CEO of Diamondback, Travis Stice) that the US might have reached peak oil production
Two main reasons are attributed to 1) shrinking amount of quality shale oil acreage, and 2) lower rig activity due to lower oil prices
For example, in its 10 June 2025 Press Release and 8 July 2025 Short-Term Energy Outlook, the Energy Information Administration of the US Department of Energy said peak crude production was reached in the 2nd quarter of 2025 at 13.5 million barrels per day.
EIA said 2026 production will decline to 13.3 million barrels per day by Q4 2026.
Permian produces about 6.1 million barrels per day and is a major contributor to US crude production.
Woods highlighted that the former leader of Pioneer is now in charge of all of ExxonMobil’s Permian production.
Blue hydrogen is more challenging; timing (for FID) might slip vs. earlier plan.
In answering Betty Jiang from Barclays on ExxonMobil’s low-carbon business, Woods said that ExxonMobil sees no significant change to its 10 mtpa of CO2 capture and sequestration plan.
On lithium, Woods said that the attempt to get the cost down might take longer than anticipated.
What's next: ExxonMobil will publish its energy outlook to 2050 later in August.
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