shale sale now on, page-18

As promised here's the AUDIO & the transcript:-

Source: http://www.abc.net.au/worldtoday/content/2011/s3270086.htm

TRANSCRIPT

BHP punts on shale gas future in $15b deal
Peter Ryan reported this story on Friday, July 15, 2011 12:26:00

SHANE MCLEOD: The world's biggest miner BHP Billiton has unveiled a $15 billion takeover of the US gas producer, Petrohawk Energy.

The deal, if it's approved by shareholders and regulators, will give BHP a critical foothold in the booming shale gas industry. The takeover also helps BHP in the carbon debate given that shale gas is a major source of clean-burning fuel.

I'm joined now in the studio by our business editor, Peter Ryan and Peter, this is the latest big deal for BHP Billiton but why is this one so important?

PETER RYAN: Well, Shane, BHP desperately needs a success after failed attempts to buy Canada's Potash Corporation and also a joint venture in the Pilbara with Rio Tinto that pretty much ended in tears.

The other side to this story is that shale gas is compelling for a carbon-emissions intensive company like BHP given that shale is seen as a major alternative to coal-fired energy because it's a clean-burning fuel and Petrohawk has a lot of it with big resources in Texas and Louisiana in the United States that produce the equivalent of 158,000 barrels of oil a day.

And BHP Billiton wants this so much that it is prepared to pay a 65 per cent premium for a long-term project and the $15 billion figure that you mentioned in the intro there Shane, represents $US38.75 a share for all of the issued and outstanding shares in Petrohawk, as well as taking on a lot of Petrohawk's debt.

BHP's chief executive Marius Kloppers spoke to journalists on a teleconference this morning and said that despite the enormous cost, it was a long-term investment towards a low-emissions world.

MARIUS KLOPPERS: We do believe that the world over time will make energy choices that is consistent with our belief that carbon in the atmosphere is real and that the science is real and that the world has to do something about that over time, we certainly believe that. Clearly what we need to take into account over time and I'm talking about decades here is how the world prices out gas in different parts of the world.

SHANE MCLEOD: That is BHP Billiton's chief executive Marius Kloppers. Peter Ryan, isn't this a bit of a risky time to be getting into such a big deal, $15 billion?

PETER RYAN: Well, yes when you consider the debt crisis in Europe and the prospect of a debt default in the United States - it's quite a scary world but Marius Kloppers says BHP makes two-thirds of its sales to Asia, notably China and India, so he's quite optimistic.

He also sees Europe and America's economic woes as pretty much near term but clean energy production is the future, with a lot of that risk delivering big dividends to the company and of course, investors ultimately.

SHANE MCLEOD: What has been the reaction from investors today?

PETER RYAN: Investors appear to be a bit worried about the 65 per cent premium BHP is prepared to pay and as a result BHP shares opened 2 per cent weaker this morning since then though the shares have gained back a little bit more ground.

But its dragged down the overall market given the market-moving size of BHP Billiton and the All Ordinaries index is down around 0.5 per cent and also as we've seen this week, investors are becoming increasing cautious about the deepening debt crisis in Europe and whether that will ultimately engulf big economies like Italy and Spain.

And just adding to the debt story in the United States, the ratings agency Standard & Poor's has come out to say that the United States could face a downgrade from its AAA credit rating unless Barack Obama's impasse with the US Congress is resolved

SHANE MCLEOD: Business editor Peter Ryan, thank you.