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Exxon Mobil buys additional Permian assets for $6.6bn

BP buys BHP Billiton's US onshore assets for US$10.5 bln

Jul 29, 2018
3 min read
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UK's BP has agreed to buy BHP U.S. portfolio of onshore unconventional oil and gas assets for US$10.5 billion that will transform its U.S. onshore oil and gas business.

The acquisition will bring BP extensive oil and gas production and resources in the liquids-rich regions of the Permian and Eagle Ford basins in Texas and in the Haynesville gas basin in Texas and Louisiana.

Under the terms of the agreement, BP America Production Company will acquire from BHP Billiton Petroleum (North America) Inc. 100 per cent of the issued share capital of Petrohawk Energy Corporation – the wholly-owned subsidiary of BHP which holds the assets – for a total consideration of $10.5 billion.

On completion, $5.25 billion, will be paid in cash from existing resources. $5.25 billion will be deferred and payable in cash in six equal instalments over six months from the date of completion. The deal is subject to regulatory approval and is anticipated to complete by the end of October 2018.

Bob Dudley, BP group chief executive, said: “This is a transformational acquisition for our Lower 48 business, a major step in delivering our Upstream strategy and a world-class addition to BP’s distinctive portfolio. Given our confidence in BP’s future – further bolstered by additional earnings and cash flow from this deal – we are increasing the dividend, reflecting our long-standing commitment to growing distributions to shareholders.”

BP has agreed to acquire assets with 470,000 net acres of licences, including a new position for BP in the liquids-rich Permian-Delaware basin, and two premium positions in the Eagle Ford and Haynesville basins. The assets have combined current production of 190,000 barrels of oil equivalent per day (boe/d), about 45 per cent of which is liquid hydrocarbons, and 4.6 billion barrels of oil equivalent (boe) resources.

Bernard Looney, BP’s Upstream chief executive, said: “This is a major upgrade for one of BP’s key Upstream regions, giving us some of the best acreage in some of the best basins in the onshore US. I believe our dynamic, highly-efficient team will be able to unlock the full potential of these assets. This will increase our target for free cash flow from the Upstream by $1 billion, to $14-15 billion in 2021, and provide opportunities for continuing growth well into the next decade.”

Maxim Petrov, senior analyst, Wood Mackenzie commented: “The most valuable part of the package is BHP’s Eagle Ford position given its scale and attractive economics. But the Permian acreage offers the biggest longer-term upside, with some of the best breakevens in the play, well below US$50/bbl Brent. Similarly, the Haynesville assets have some of the most attractive shale gas economics outside the Marcellus, and nicely compliment BP’s existing acreage in the play.”

The combined business will continue to be led by David Lawler, CEO of BP’s existing US onshore business.

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