BHP Billiton has entered into a definitive agreement to purchase Texas-based oil and gas company Petrohawk Energy to expand its interests in the booming shale gas market.
The equity value of the transaction is $12.1 billion, and the Petrohawk board of directors has unanimously recommended the offer to shareholders.
Petrohawk’s assets cover approximately 1,000,000 net acres in Texas and Louisiana, with estimated 2011 net production of approximately 950 million cubic feet equivalent per day (MMcfe/d), or 158 thousand barrels of oil equivalent per day (Mboe/d).
At year-end 2010, Petrohawk reported proved reserves of 3.4 trillion cubic feet of natural gas equivalent (Tcfe).
Marius Kloppers, CEO of BHP Billiton, said the acquisition was a natural fit with BHP Billiton’s strategy. “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,” he said.
J. Michael Yeager, chief executive of BHP Billiton Petroleum, said the Petrohawk acquisition would add high quality growth to the company.
“Petrohawk has a focused portfolio of three world class onshore natural gas and liquids rich shale assets. 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.
“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 per cent for the remainder of the decade as we accelerate our shale development program and leverage our strategic capability in the deep water.”
Floyd Wilson, CEO of Petrohawk was enthusiastic about the deal. “We believe these premium oil and natural gas assets would benefit significantly by residing within a larger entity that can employ more capital intensity to accelerate their realised value,” he said. “We are excited to see this transaction completed and to be part of the BHP Billiton organisation.”
