Daily Management Review

BHP to sell its shale business in the US by early 2019


06/04/2018


Anglo-Australian mining giant BHP Billiton, which plans to withdraw from its shale oil and gas business in the US, has received several offers to purchase these assets. However, the deal will take place no earlier than the end of 2018 or the beginning of 2019, Reuters writes citing its own sources.



BHP to sell its shale business in the US by early 2019
The company’s Houston division, BHP Petroleum, owns more than 838,000 acres (about 3,391 square kilometers) of land in four shale formations: the Permian basin and the Eagle Ford field in Texas, as well as the Haynesville and Fayetteville formations in Arkansas.

BHP estimates the total area at $ 14 billion. However, according to analysts, the total value of assets is a maximum of $ 9 billion.

BHP Billiton, the largest mining company in the world, said back in 2017 that it could sell from its oil and gas division in the US, since it had been showing weak results. This decision BHP took under pressure from Elliott Management hedge fund. The fund owns a stake in the company.

BHP offers to sell seven different sites, covering three formations. This happened to be interesting to oil companies, which together with investment companies want to buy assets entirely; some are considering individual sites.

The first applications were received a couple of days ago, but the deal is not expected earlier than the end of this year, two sources told Reuters.

It is not clear whether BHP will hold the second round of bidding with certain participants, or the company will continue to review applications received to ensure the preferred transaction.

According to the agency's interlocutors, Blackstone Group LP and the consortium Royal Dutch Shell Plc, which is advised by Jefferies, as well as Chevron Corp in partnership with Warburg Pincus, became interested in the shale business of BHP.

Apollo Global Management LLC has applied separately. In addition, BP Plc CEO Bob Dudley said last month that the company can apply as well.

BHP Billiton CEO Andrew Mackenzie said that there was "encouraging interest from potential bidders."

According to him, the increase in oil prices and the reduction in the corporate income tax rate in the US makes the US shale business BHP more attractive.

source: reuters.com






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