27 Jul

BHP Announces Shale Assets Sale to BP: All You Need to Know

WRITTEN BY Anuradha Garg

BHP’s sale of US onshore oil and gas assets

On July 26, BHP Billiton (BHP) announced that it entered into two separate transactions to exit its US onshore oil and gas assets presence. Its US (SPY) assets include Eagle Ford, Haynesville, Permian, and Fayetteville.

In the first transaction, BP plc (BP) is expected to acquire the Eagle Ford, Haynesville, and Permian assets for a total consideration of $10.5 billion, payable in cash. One-half of the consideration is payable at completion, and the balance would be payable in six equal installments over a six-month period.

The first of these installments is to be paid one month after completion. BP beat its rivals Royal Dutch Shell (RDS.A) and Chevron (CVX), which were also eyeing these assets.

BHP Announces Shale Assets Sale to BP: All You Need to Know

Transaction completion

In the second transaction, MMGJ Hugoton III, a company owned by Merit Energy Company, agreed to acquire BHP’s Fayetteville assets for $0.3 billion. This consideration would be payable at completion.

Both transactions are expected to be completed by the end of October. The effective transfer date of the rights to the economic profits is July 1.

Proceeds to go to shareholders

BHP’s CEO, Andrew Mackenzie, said, “Our priority with this transaction is to maximise value and returns to shareholders.” He added, “The sale of our Onshore US 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.”

Mackenzie noted that because BHP’s net debt is currently at the lower end of its target range of $10.0 billion–$15.0 billion, the company expects to return the net proceeds from these transactions to its shareholders.

In the next two parts of this series, we’ll see how BHP’s stock price reacted to this transaction and what analysts are saying about this deal.

Latest articles

Goldman Sachs (GS) settled a lawsuit that alleged it rigged bond prices. Also, Deutsche Bank agreed to pay a fine of $15 million to settle a lawsuit.

In the November 15 premarket trading session, Amarin Corporation (AMRN) stock rose more than 7%, caused by the FDA positive decision for Vascepa.

In the November 14 trading session, Aurora Cannabis (ACB) stock fell 12.7% from the previous session during after-hours trading.

Strategy Analytics reported that Apple could lead the 5G smartphone market in 2020, outshining Samsung—the current leader in the global 5G market.

This week has been tough for the cannabis sector. Cronos Group and Canopy Growth reported lower-than-expected earnings, and the sector ETFs dropped.

Yesterday, Argus Research upgraded Uber stock from “hold” to “buy.” Let's look at Uber and Lyft’s recent analyst rating changes.