BHP Billiton says it has agreed to buy a substantial shale field in the US for $US4.75 billion ($4.71 billion).<\/p>\n
BHP Billiton says it has agreed to buy a substantial shale field in the United States for $US4.75 billion ($4.71 billion), prompting the shares to rise 3 per cent.<\/p>\n
Shares in the world’s biggest mining company gained $1.37, or 2.99 per cent, to $47.22 by 10.09am (AEDT). The stock closed at a 2 1\/2 year high $47.36 on February 15.<\/p>\n
The shale assets form all of Chesapeake Energy Corp’s interest in the Fayetteville Shale field, in Arkansas, including the field’s mid-stream pipeline system.<\/p>\n
BHP said that it would fund the acquisition from cash resources.<\/p>\n
“The acquisition is consistent with BHP Billiton’s strategy of investing in large, long-life, low cost assets with significant volume growth from future development,” BHP Billiton said.<\/p>\n
“It also supports our goal of diversification by geography, customer and product.<\/p>\n
“BHP Billiton will become the operator of Chesapeake’s operated interests in the field.”<\/p>\n
The miner and energy producer announced the purchase as it also said it would begin immediately a $5 billion off-market buyback of its shares, part of the $10 billion capital management program that it flagged in its half year results last week.<\/p>\n
Chesapeake’s Fayetteville shale assets include around 487,000 acres of leasehold and producing natural gas properties, producing over 400 million cubic feet of gas per day.<\/p>\n
They were “the second largest position in one of the largest gas fields in the world”, BHP Billiton said.<\/p>\n
“This acquisition will increase BHP Billiton’s net reserve and resource base by 45 per cent.”<\/p>\n
The assets included development options that would support substantially higher production over a 40 year operating life, BHP said.<\/p>\n
“The assets acquired generate strong margins and returns on capital at today’s prices,” BHP Billiton said.<\/p>\n
BHP Billiton expected to close the deal in the first half of 2011, pending regulatory approvals.<\/p>\n
The chief executive of BHP Billiton Petroleum, Michael Yeager, said the Fayetteville Shale assets were “a world-class onshore natural gas resource”.<\/p>\n
“This transaction marks BHP Billiton’s entry into the US shale gas business.<\/p>\n
“The operated position we are obtaining will immediately make BHP Billiton a major North American shale gas producer.<\/p>\n
“It provides access to a competitive, long-life resource basin that benefits from our ability to invest through the economic cycles.”<\/p>\n
BHP Billiton said it may vary the size of the off-market share buyback. <\/p>\n<\/div>\n
Originally posted here:
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