BHP shale assets reportedly valued at up to US$9 billion in first bidding round

12 June 2018, Week 23, Issue 410

First-round bids for BHP’s US shale portfolio have valued the assets at around US$7-9 billion, sources familiar with the matter told Bloomberg on June 5. 

Multiple parties, including both private equity firms and super-majors, have bid for individual packages of shale acreage being sold by the Australian firm.

The company’s assets for sale consist of 800,000 net acres (3,237 square km) across some of North America’s most prolific unconventional plays, including three packages in the Permian Basin, with the rest spread across the Eagle Ford, Haynesville and Fayetteville formations. 

BHP first announced plans to sell off its onshore US assets in the summer of 2017 after disclosing that its US$20 billion investment into shale – among other decisions – had eliminated US$40 billion in shareholder value. 

The sale is attracting widespread attention from some of the world’s biggest oil firms. Royal Dutch Shell’s upstream director, Andy Brown, confirmed in February that the company was interested in some of the packages for sale. Meanwhile, BP is reportedly working with Morgan Stanley to acquire some of BHP’s acreage in the Permian.

BP was forced to offload its assets in the Permian in 2010 to pay for the aftermath of its disastrous oil spill in the US Gulf of Mexico earlier that year. In April, BP’s chief financial officer, Brian Gilvary, said that the company had struggled to find profitable acquisitions that would allow it to re-enter the Permian for several years. 

As this was only the first bidding round, BHP expects the price of its assets to rise, hoping to receive in excess of US$10 billion in the second round and up to US$13 billion if the packages are eventually sold separately. However, the company is reportedly seeking to sell the entire unit to a single buyer, creating a more competitive bidding environment, and could invite second-round bids in July.

The final sale agreement is not expected to be reached until later this year at the earliest.

 

Edited by

Anna Kachkova

Editor

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