BP Might Buy Some BHP Billiton U.S. Shale Assets

Supermajor BP is studying some of the onshore U.S. shale assets put up for sale by BHP Billiton, as the UK giant looks to more shale exposure, Bloomberg reported on Thursday, quoting people familiar with the matter.

BP has hired Morgan Stanley to advise on a possible offer, but no decision has been made yet, and BP could drop the plan to bid for some BHP assets, according to Bloomberg’s sources.

BP is said to be studying whether it could team up with other companies in a joint bid, or possibly swap some conventional oil and gas assets for some of BHP’s shale assets, the sources said. All three companies involved—BP, BHP, and Morgan Stanley—declined to comment on the sale for Bloomberg.

Last summer, BHP Billiton said that it would start seeking buyers for its U.S. shale oil and gas operations after deciding that this business is non-core.

BHP is selling its assets in the Permian, Eagle Ford, Haynesville, and Fayetteville, and has said that they are worth at least US$10 billion.

In a webcast with retail shareholders in March, BHP chief financial officer Peter Beaven said that “there will be a lot of bids from a lot of different parts for this very large business, happily there’s also a lot of interest.”

In a results release in April, BHP said that “the exit process for our Onshore US assets is progressing to plan and the data rooms for all fields and mid-stream assets are now open. We expect to receive bids by June 2018 and proceed with negotiations to potentially announce one or several transactions in the first half of the 2019 financial year. In parallel, we continue to explore potential asset swap opportunities and exit via demerger or Initial Public Offering.”

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BP does have tight gas upstream operations in the U.S., including in the Eagle Ford.

In early March, Sky News reported that Shell and private equity firm Blackstone are working on a joint US$10-billion bid for BHP’s shale assets in the U.S.

Shell aims to boost its shale oil production, the head of shale operations Greg Guidry told Reuters in March. The Anglo-Dutch oil major is active in the Permian, where it has 280,000 net acres.

By Tsvetana Paraskova for Oilprice.com

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