BHP Billiton Petroleum (BHP) has just announced that they have agreed on the sale of their interests in the Eagle Ford, Haynesville, Permian and Fayetteville Onshore US oil and gas assets, for US$10.8 billion.
MMGJ Hugoton III, LLC, a company owned by Merit Energy Company, has agreed to acquire 100 per cent of the issued share capital of BHP Billiton Petroleum (Arkansas) Inc and 100 per cent of the membership interests in BHP Billiton Petroleum (Fayetteville) LLC. This will be acquired for a total consideration of US$300 million (less customary completion adjustments), which will be available for payment at the project’s completion, currently expected to occur by the end of October 2018.
The Eagle Ford, Haynesville and Permian fields comprise approximately 526,000 net acres of oil, gas and natural gas liquids that are sold domestically in the United States via connections to intrastate and interstate pipelines, as well as internationally through the export of processed condensate. In the 2018 financial year these assets produced approximately 58.8 million barrels of oil equivalent.
In August 2017, BHP confirmed that they would be seeking to exit their US shale assets.
“The sale of our Onshore US assets is consistent with our long-term plan to continue to simplify and strengthen our portfolio to generate shareholder value and returns for decades to come,” announced BHP’s Chief Executive Officer, Andrew Mackenzie.
“With net debt currently toward the lower end of our target range of US$10 to US$15 billion, and consistent with our Capital Allocation Framework, we expect to return the net proceeds from the transactions to shareholders,” he said.
BHP anticipates that the estimated income tax expense from these transactions will be approximately US$200 million and that the estimated cash tax payable will be less than US$100 million after forwarding tax losses. BHP will continue to operate the assets until completion and will work closely with the purchasers, to ensure a smooth transition of ownership.
More information about this announcement can be found here.