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With BP Shale Deal, BHP Billiton Keeps Simplifying Its Business

BHP Billiton Announces Record Financial ResultsBHP Billiton Announces Record Financial Results
BHP has announced or completed more than $18 billion of divestments in the last six years. Ryan Pierse—Getty Images

BHP Billiton is selling off a large part of its oil and natural gas assets in the United States, the company announced on Friday, in a deal that will shake up ownership of U.S. shale.

BP America Production Company, part of the British multinational BP, will be the new owner of the assets, which include a golden nugget in Texas’s Permian Basin—the world’s fastest growing major oil region.

The deal agreed to by the two giants will see BP fork out $10.5 billion, payable in cash. In a statement, BP describes its new assets as both “world-class” and “unconventional.”

Meanwhile, Anglo-Australian miner BHP issued a statement in which CEO Andrew Mackenzie, said: “The sale of our Onshore U.S. assets is consistent with our long-term plan to continue to simplify and strengthen our portfolio to generate shareholder value and returns for decades to come.”

The acquisition will deliver 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 that stretches over parts of Texas and Louisiana. These fields comprise approximately 526,000 net acres. In the 2018 financial year they produced 58.8 million barrels of oil equivalent, BHP said.

At the same time, in a second deal announced on Friday, BHP said it would sell its Fayetteville shale business in Arkansas to closely held Merit Energy Co., in an agreement worth $300 million. Consisting of approximately 268,000 net acres, in the 2018 financial year Fayetteville produced 13.3 million barrels of oil equivalent (79.9 billion cubic feet of gas).

The BHP deal is BP’s biggest acquisition in nearly two decades and is seen as signaling that the company has all but recovered from crude oil’s price crash and the 2010 Deepwater Horizon catastrophe in the Gulf of Mexico.

BHP, on the other hand, has announced or completed more than $18 billion of divestments in the last six years. Both of the deals it announced on Friday are expected to be completed by the end of October.