BHP Billiton increases shale assets with purchase of Petrohawk

BHP Billiton has bought Petrohawk for approximately US$ 12.1 billion. The transaction would provide BHP Billiton with operated positions in the three world class resource plays of the Eagle Ford and Haynesville shales, and the Permian Basin.

Petrohawk’s assets cover approximately 1,000,000 net acres in Texas and Louisiana, with estimated 2011 net production of approximately 950 million ft3/d. At year-end 2010, Petrohawk reported proved reserves of 3.4 trillion ft3. The company has a current non-proved resources base of 32 trillion ft3.

BHP Billiton CEO, Marius Kloppers, said the acquisition was a natural fit with BHP Billiton’s strategy.
“The proposed acquisition of Petrohawk is consistent with our well defined, upstream, Tier 1 strategy and provides us with even greater exposure to the world’s largest energy market, while also broadening our geographic and customer spread. Importantly, our offer and the associated substantial premium represent a unique opportunity for Petrohawk shareholders and recognise the growth opportunities embedded in its portfolio immediately.”

The deal provides BHP Biliton with the potential to more than double its existing resource base after its earlier acquisition of the Fayettevile shale in Arkansas.

While soaring global energy demand is driving industry to tap new energy reources, the massive shale gas boom which the US is currently experiencing is partly driven by a need to reduce American dependence on OPEC. With the recent upheaval in the Middle East, there has been recognition that America is increasingly not in control of its resource base and it is not necessarily on the best of terms with large parts of the Middle East.

The ‘Arab Spring’ may prove to be a double-edged sword for America because while the transition towards democracy in many of the nations may bring greater transparency and more freedom for the people living there, the new leaders are an unknown quantity to America and may want to re-orientate their own foreign policy and be less amenable to the US.

Published on 15/07/2011

 
 

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