USA: Oil & Gas BP Takes Over World-Class Unconventional Assets from BHP
The acquisition will transform BP’s US onshore business and also lead the firm to possess assets that have a combined production of 190,000 boe/d and 4.6 billion boe resources.
United Kingdom – In a move that will upgrade and materially reposition its US onshore oil and gas business, BP has agreed to acquire a portfolio of world-class unconventional oil and gas assets from BHP. The acquisition will bring BP extensive oil and gas production and resources in the liquids-rich regions of the Permian and Eagle Ford basins in Texas and in the Haynesville gas basin in Texas and Louisiana.
Under the terms of the agreement, BP America Production Company will acquire from BHP Billiton Petroleum (North America) 100 % of the issued share capital of Petrohawk Energy Corporation – the wholly-owned subsidiary of BHP which holds the assets – for a total consideration of 10.5 billion dollars, subject to customary adjustments. Following completion of the acquisition, BP intends to make new divestments of 5-6 billion dollars, predominantly from the Upstream segment.
Liquids-rich assets with synergies
BP has agreed to acquire assets with 470,000 net acres of licences, including a new position for BP in the liquids-rich Permian-Delaware basin, and two premium positions in the Eagle Ford and Haynesville basins. The assets have combined current production of 190,000 barrels of oil equivalent per day (boe/d), about 45 % of which is liquid hydrocarbons, and 4.6 billion barrels of oil equivalent (boe) resources.
The move is expected to increase the firm’s target for free cash flow from the Upstream by 1 billion dollars, to 14-15 billion dollars in 2021, and provide opportunities for continuing growth well into the next decade. The acquisition will also significantly increase the liquid hydrocarbon proportion of BP’s production and resources in the US onshore, to around 27 % of production and 29 % of resources from the current 14 % and 17 % respectively.
BP’s existing US onshore oil and gas business currently produces around 315,000 boe/d from operations across seven oil and gas basins in five states with resources of 8.1 billion boe. Since BP established it as a separate business organisation with new management four years ago, it has grown production and improved capital efficiency, with unit production costs reduced by 34 % since 2013.
The combined business will continue to be led by David Lawler, CEO of BP’s existing US onshore business. BP estimates that post-integration it will deliver more than 350 million dollars of annual pre-tax synergies through sustainable cost reductions and commercial and trading opportunities unique to BP.