BP to buy BHP's US shale oil and gas assets for $10.5bn

Dw would sure feel good abt the ol' ice2 with this sort of interest in shale...a fraction would be nice us SHs!

BP to buy BHP's US shale oil and gas assets for $10.5bn
BP has agreed to buy US shale oil and gasfields from the Anglo-Australian miner BHP for $10.5bn (£8bn), in the UK firm’s biggest acquisition in nearly two decades.

Bob Dudley, BP’s chief executive, lauded the deal as transformational and industry watchers said the move significantly beefed up the company’s US shale presence, which was small compared to peers.

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The acquisition will boost BP’s US oil and gas production by nearly a fifth and marks a new period of growth for the company, which is emerging after years under the $65bn burden of the Deepwater Horizon disaster.

In total, 470,000 acres of assets are covered in the deal, including fields in the Permian in west Texas, the Eagle Ford in south Texas and Haynesville in east Texas and Louisiana.


Analysts said Eagle Ford was the most valuable of the three because of its scale and economics, while the Permian offered the greatest long-term promise.

BHP bought the fields in 2011 but has struggled to make them work, putting them up for sale last August.

BP said it believed its approach would differ by bringing $350m of synergies from its other US operations and capital efficiencies.

Bernard Looney, the chief executive of BP’s upstream division, said: “It gives us access to some of the best acreage in the best basins. It takes us into the very heart of the most-talked-about oil play in the world [the Permian].”

The UK oil giant was “not desperate to do a deal” he added but BP believed the quality of the resources made the acquisition worthwhile.

After the deal is completed BP’s US production will climb from 744,000 barrels of oil equivalent per day to 885,000 boe/d.


“BP was previously underweight to US tight oil compared to its peers. This deal transforms BP’s US business,” Maxim Petrov, a senior analyst at Wood Mackenzie, said.

BP said it was making “conservative assumptions” about how much oil and gas could be pumped to begin with, given regional bottlenecks around infrastructure such as pipelines. “We think the infrastructure will get built out over the next two years,” Looney said.

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The acquisition will be fully paid for in cash and is being part-funded by the company divesting its interests in the Greater Kuparuk Area in Alaska, which will raise $5-6bn.

The scale of BP’s deal dwarfs its recent $200m investment in Europe’s biggest solar company and its £130m purchase of the UK’s largest electric car charging network.

BHP said it would return the proceeds to investors and shares ended the day up 2.3% in Australia, to A$34.40. BP’s share price fell by 1.5%. The company’s last biggest transaction was when it bought the American oil company Atlantic Richfield in 1999.