BHP Billiton boosts shale gas presence with $12.1bn Petrohawk deal

15 July 2011 11:34  [Source: ICIS news]

LONDON (ICIS)--BHP Billiton will acquire US-based Petrohawk Energy for about $12.1bn (€8.5bn) in cash, as it looks to strengthen its position in the growing shale gas market, the Australia-based mining giant said on Friday.

BHP Billiton entered into a definitive agreement to acquire all of the issued and outstanding Petrohawk shares for $38.75 per share by means of an all-cash tender offer, representing a total equity value of about $12.1bn and a total enterprise value of about $15.1bn.

The tender offer, which is still subject to certain conditions, is expected to commence by 25 July 2011, and aiming to close in the third quarter of 2011.

“Petrohawk has a focused portfolio of three world-class onshore natural gas and liquids-rich shale assets [in Eagle Ford, Haynesville shales and the Permian Basin, in the US],” said BHP Billiton Petroleum chief executive J Michael Yeager.

“With over a decade of significant investment and volume growth ahead, this transaction would build on our recent acquisition of the Fayetteville shale in Arkansas, and provides the potential to more than double our existing resource base,” he added.

“Following completion of the Petrohawk transaction, BHP Billiton Petroleum will be on track to deliver a compound annual production growth rate of more than 10% for the remainder of the decade, as we accelerate our shale development program and leverage our strategic capability in the deep water,” Yeager concluded.

Petrohawk’s assets cover approximately 1m net acres in Texas and Louisiana, in the US, with estimated 2011 net production of approximately 950m cubic feet equivalent per day, or 158,000 bbl/day of oil equivalent.

At the end of 2010, Petrohawk reported proved reserves of 3.4 trillion cubic feet (tcf) (96.3 trillion cubic metres) of natural gas equivalent. The company has a current non-proved resources base of 32 tcf for a total risked resource base of 35 tcf, BHP Billiton said.

“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,” said BHP Billiton CEO, Marius Kloppers.

BHP Billiton said the transaction will be financed from existing cash resources and a new credit facility.

($1 = €0.71, €1 = £0.88)

By: Franco Capaldo
+44 (0)20 8652 3214

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