'Giant discovery' sends BP's shares soaring

Oil major BP today reported a "giant discovery" in the Gulf of Mexico sending its shares to a new high for the year.

The firm struck it rich at the Tiber Prospect about 250 miles south east of Houston in which it has a 62% stake.

Shares jumped nearly 4% or 19.8p to 539.3p - their highest since the start of the year - as investors cheered the find which will give BP access to much-needed oil reserves for years to come.

The Tiber well is being hailed as a winner by City analysts. It will help BP, already the biggest producer in the Gulf of Mexico, boost output in the region by 50% to 600,000 barrels of oil equivalent a day from 2020.

Drilled to a total depth of 35,055 feet - greater than the height of Mount Everest - BP said that the well is "one of the deepest ever drilled by the oil and gas industry". Jonathan Rigby, an analyst at UBS, said: "It will take a while to develop, the second half of next decade, but it's very important."

Tiber will go a long way to fulfilling BP's promise to shareholders of obtaining guaranteed reserves for the long-term future.

The absence of a guaranteed reserve pool has been a constant thorn in the side of both BP and rival Royal Dutch Shell managements in recent years.

Oil companies have been forced to look further afield and into less-hospitable areas to replenish reserves. As a result, costs have soared, squeezing profit margins.

This is also likely to have been the case with Tiber for which BP and its partners - Petrobras of Brazil and ConocoPhillips of the US - are said to have overcome challenging geological conditions.

No doubt those executives at BP who gave the go-ahead for the project will be breathing a deep sigh of relief that their gamble has paid off.