By John Donovan
Shell has taken another step deeper into the US Gulf, agreeing to acquire a 30% interest in BP’s Conifer exploration prospect, a high-pressure deepwater opportunity sitting close to BP’s developing Kaskida production hub.
Reuters reported on 2 September 2026 that Shell Offshore Inc., a subsidiary of Shell plc, will acquire the interest while BP retains 70% and remains operator. Financial terms have not been disclosed.
Shell’s own announcement confirms that Conifer lies in Keathley Canyon, around 250 miles southwest of New Orleans, and that the first exploration well is currently expected to be drilled in 2027.
For the avoidance of premature excitement, Conifer is still an exploration prospect. It is not yet a declared discovery, reserve or development.
But its location is what makes the transaction particularly interesting.
Conifer sits beside one of BP’s biggest Gulf growth bets
BP’s nearby Kaskida development is one of the company’s most important new deepwater projects.
BP took the final investment decision on Kaskida in July 2024. The first phase is designed around a new floating production platform capable of producing 80,000 barrels of crude oil per day from six wells, with first production expected in 2029.
BP says the initial Kaskida phase contains around 275 million barrels of oil equivalent of recoverable resources. More broadly, BP describes Kaskida as the first step toward unlocking about 10 billion barrels of discovered resource in place across its Paleogene position in the Gulf.
Conifer lies nearby.
That does not mean Conifer will automatically become a Kaskida tieback, and neither Shell nor BP has announced such a development plan.
But proximity to major planned infrastructure plainly gives a successful exploration well strategic possibilities that an isolated frontier prospect would not enjoy.
Shell is buying 30% of that possibility.
Five leases, one exploration prospect
Oil & Gas Journal reports that Conifer spans five leases.
BP obtained four of them in August 2023 following Lease Sale 259 and added the fifth in February 2026. Shell will enter all five leases under the new agreement.
BP remains firmly in control with its 70% working interest and operatorship.
Shell, meanwhile, gets exposure without assuming the operating role or carrying the entire exploration risk.
That is classic oil-major portfolio management: share the geological gamble, retain access to the upside.
Shell: “another way to strengthen our position”
Shell USA President and Gulf executive vice-president Colette Hirstius described the rationale succinctly:
“The Gulf of America remains a world-class basin.”
She said Conifer was another means of strengthening Shell’s position in what she called a highly competitive region.
Shell also repeated its claim that it is the largest producing leaseholder in the Gulf and that its production there has among the lowest greenhouse-gas intensity in the world for oil production when compared with other International Association of Oil & Gas Producers members.
That qualification matters.
“Low-carbon oil” still involves producing and ultimately burning hydrocarbons. Shell’s claim concerns the GHG intensity of producing the barrels, not the absence of emissions from their eventual use.
Shell’s Gulf strategy is becoming increasingly obvious
Conifer is not an isolated transaction.
Shell describes the Gulf as one of the heartlands of its global deepwater business.
As of its 2026 reporting, Shell operated 10 producing Gulf hubs, including Mars, Olympus, Auger, Perdido, Ursa, Appomattox, Vito, Stones and Whale. Its eleventh development, Sparta, is under construction and expected to start production in 2028.
Shell has told investors it aims to maintain average Gulf production of roughly 300,000 barrels of oil equivalent per day into the 2030s.
That is not the language of a company retreating from oil.
It is the language of a company deciding very carefully which oil it wants to own.
Sell Na Kika. Buy into Conifer.
That selectivity can be seen particularly clearly in another Shell announcement from only two months ago.
On 30 June 2026, Shell agreed to sell its 50% non-operated interest in BP-operated Na Kika, together with its Coulomb tieback, to Talos Energy and Ridgewood Energy for $1.7 billion, subject to adjustments and contingent payments.
Shell said Na Kika and Coulomb were not expected to be meaningful contributors to its production by 2030.
Now Shell is acquiring a non-operated stake in another BP-run Gulf opportunity — Conifer.
There is no contradiction.
Na Kika is a mature producing asset that started operating in 2003.
Conifer is an exploration prospect beside one of BP’s major future Paleogene hubs.
Shell appears to be exchanging exposure to aging production for exposure to potential future high-value barrels.
That is portfolio pruning, not withdrawal.
Shell has already been buying more Gulf oil exposure
In 2025 Shell increased its working interest in the Ursa platform from about 45.4% to 61.35%, buying additional exposure from ConocoPhillips.
Shell said at the time that it was targeting profitable, “carbon-competitive” oil and gas projects and seeking to maintain stable liquids production.
Whale began production in January 2025 with estimated peak output of 100,000 barrels of oil equivalent per day.
Sparta is designed for another 90,000 boe/d when it starts up, currently expected in 2028.
Add Conifer to that sequence and a consistent strategy emerges.
Shell wants deepwater barrels where it believes the geology, infrastructure, operating costs and emissions intensity make them competitive for decades.
And BP is bringing Shell into Brazil as well
The Conifer announcement was actually only half of a broader BP-Shell deal.
At the same time, Shell agreed to acquire a 50% interest in BP’s Tupinambá exploration block in Brazil’s Santos Basin.
BP will retain the other 50% and remain operator.
The Tupinambá exploration well is expected to spud soon, while completion of that transaction remains subject to regulatory approval.
So in a single set of agreements, two of Britain’s largest oil companies are teaming up in two of the world’s most important offshore petroleum provinces: Brazil and the US Gulf.
Reuters correctly placed the transactions in a broader strategic context: both companies have been placing renewed emphasis on long-term oil and gas growth after years in which their public strategies devoted much greater attention to renewables and lower-carbon businesses.
The old rivals increasingly look like partners
There is a certain historical irony here.
Shell and BP have spent more than a century as rivals — competing for acreage, reserves, engineering talent, customers and investor capital.
Yet modern deepwater exploration is expensive enough that rivalry does not preclude partnership.
Shell already has BP as a partner in assets such as Ursa.
BP operated Na Kika while Shell owned half of it.
Now BP will operate Conifer with Shell owning 30%.
In Brazil the same two companies will split Tupinambá 50-50.
Competition at corporate level can coexist quite comfortably with risk-sharing several thousand metres below the sea.
No discovery yet — and no guarantee of one
It is worth emphasizing what Shell has not announced.
There is no Conifer discovery.
There is no published recoverable-resource estimate.
There is no final investment decision.
There is no announced production date.
There is no declared connection to Kaskida.
And the transaction price has not been disclosed.
The first major geological test is expected in 2027.
Until the drill bit reaches the reservoir, Conifer remains an exploration wager.
Shell has simply decided that it wants 30% of the ticket.
Commentary
For anyone still interpreting Shell principally through the sweeping energy-transition rhetoric of several years ago, transactions such as Conifer are useful reality checks.
Shell is certainly investing in lower-carbon businesses.
But its current capital strategy is also unmistakably built around keeping high-margin oil and gas production commercially strong for many years.
The company is selling some mature assets.
It is increasing stakes in others.
It is constructing new platforms.
It is pursuing tiebacks.
And now it is buying into exploration prospects beside the next generation of ultra-deepwater hubs.
Shell’s preferred defence is that Gulf production is relatively low in operational greenhouse-gas intensity.
Commercially, that may indeed make these barrels more competitive within Shell’s portfolio.
Environmentally, however, a low-intensity barrel remains a barrel of oil.
There is therefore nothing particularly mysterious about Conifer.
It is another piece of a strategy Shell has been communicating increasingly clearly:
keep the strongest hydrocarbon assets, discard weaker ones, and make sure the upstream engine continues generating cash well into the 2030s.
The more interesting feature of today’s announcement may be who is sitting beside Shell at the drilling table.
BP.
Two companies once encouraged to reinvent themselves as broad energy-transition businesses are jointly returning to one of the places they know best:
deep water, expensive geology and the possibility of a very large oil prize.
The Conifer well expected in 2027 will tell us whether there is actually a prize there.
Until then, Shell has bought itself a 30% seat at the table.
Sources
Reuters, 2 September 2026: Shell to acquire stake in BP-operated Conifer prospect in Gulf of Mexico.
Shell Offshore Inc., 2 September 2026: Shell acquisition of 30% interest in Conifer; Keathley Canyon location; expected 2027 exploration well; BP operatorship.
BP / contemporary industry reporting, 2 September 2026: Shell farm-in to Conifer and 50% Tupinambá interest; BP retains operatorship.
BP Kaskida project material: 80,000-barrel-per-day first phase, expected 2029 production and wider Paleogene resource opportunity.
Shell Gulf portfolio reporting: Mars, Sparta, Ursa, Whale and the company’s longer-term deepwater strategy.
Shell, 30 June 2026: proposed $1.7 billion sale of Shell’s 50% interest in BP-operated Na Kika and associated assets.
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