BP’s $10.5 billion deal scores prized BHP shale assets

Bloomberg

BP Plc agreed to pay $10.5 billion, its biggest acquisition in almost two decades, for most of BHP Billiton Ltd.’s onshore US oil and natural gas assets, including in the prized Permian Basin.
The deal gives the London-based energy giant a position in the Permian, a swath of west Texas and New Mexico that’s the world’s fastest-growing major oil region. It’s another sign that BP has mostly rebounded from crude’s price crash and the fatal 2010 accident in the Gulf of Mexico that left it with a more than $60 billion bill.
“We’ve just got access to some of the best acreage in some of the best basins in the onshore US,” BP’s Upstream CEO Bernard Looney said. The Permian produces about 3.4 million barrels a day, which would make it the fourth-largest member of OPEC, behind Saudi Arabia, Iraq and Iran.
To sweeten the deal for its investors, BP will lift its dividend by 2.5 percent in the second quarter, the first increase since 2014. Still, the shares reacted negatively to the transaction, falling as much as 2.4 percent in London. BHP gained
2.3 percent in Sydney.
The miner appears to have got the better side of the deal, selling the entire package of assets for a higher price than expected, RBC analyst Biraj Borkhataria said. Rising oil prices have boosted prospects for shale deals, while the Permian is a focus for industry consolidation as technological advances allow explorers to drill ever-longer sideways wells.