BHP Billiton in big US shale gas deal Rachel Hewitt From: Herald Sun February 23, 2011 12:00AM ? Michael Yeager, chief executive of BHP Petroleum, says the shale deal will increase the company's reserve and resources base by 45 per cent. Source: News Limited
MINING powerhouse BHP Billiton has snapped its streak of failed deals with a $US4.7 billion foray into United States shale gas.
In a move analysts said would cool speculation BHP has a bigger oil play in the pipeline, the miner yesterday revealed it had bought into an Arkansas shale gas field, allowing it access to "the fastest growing market in the world".
As BHP unveiled the deal, it also pleased investors by announcing that a $5 billion off-market buyback of its Australian shares would begin immediately.
The news sent BHP shares almost 1.6 per cent, or 73, higher to $46.58 -- making it a standout in a downbeat market.
BHP's buy of all Chesapeake Energy Corporation's interests in the Fayetteville shale field is its first key deal since its failed $40 billion tilt for Canada's PotashCorp in November.
Start of sidebar. Skip to end of sidebar. Related CoverageTerry McCrann: BHP Billiton starts cash splash John Beveridge: Future hale, hearty for shale gas Terry McCrann: BHP's shale gas deal strategic Cheques, balances and money to burn Courier Mail, 3 hours ago BHP buys shale gas assets in $4.6bn deal The Australian, 4 hours ago Shale be right for aggressive BHP The Australian, 4 hours ago BHP fails to live up to its aims The Australian, 4 hours ago BHP's shale gas deal strategic Herald Sun, 4 hours agoEnd of sidebar. Return to start of sidebar. Citi analysts yesterday said the shale gas play would "partially cool the heated speculation of a larger on-market M&A (mergers and acquisitions) oil deal being in the pipeline".
Deutsche Bank analyst Paul Young said the Fayetteville buy fitted BHP's checklist of "low-cost, long life and expandable" assets.
"We did think, and we continue to think, that they're also looking at acquisitions in deep water oil such as the Gulf of Mexico," he said.
Energy rival Woodside Petroleum has long been named as a potential BHP takeover target, but Pengana Capital fund manager Tim Schroeders said yesterday that appeared increasingly unlikely.
Platypus Asset Management's Prasad Patkar described BHP's shale gas foray as "a bet on the long-term price in the US domestic gas market".
Through the deal, BHP will own and operate the second biggest position in the Fayetteville field.
BHP Petroleum chief Michael Yeager said it would increase the company's reserve and resources base by 45 per cent and BHP would acquire more than 10 trillion cubic feet of gas.
He said BHP hoped to triple the asset's daily volumes over the life of the development
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