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Royal Dutch Shell and Blackstone Group will come together to bid on assets being offloaded by BHP Billiton, according to a new report by Reuters. The $10 billion bid would cover a portion of BHP’s U.S. shale operations.
BHP, Shell, and Blackstone denied comment on the story.
Private equity firms have begun investing in shale assets as the industry downturn reduces oil majors’ investment budgets. Devon Energy sold $553 million in shale gas assets in Texas to an unnamed equity firm this week.
Shell and Anadarko Petroleum already own lands that sit next to the BHP lands slated for sale. If Shell makes the purchase, it would create a larger contiguous area for the company’s shale drilling.
BHP plans to swap its onshore assets with offshore ones in order to exit U.S. shale plays, Steve Pastor, the firm’s president of petroleum operations, said this week.
Shell began drilling in the Permian in 2012, just a couple years before the market crash that continues to keep crude barrel prices low. In order to bring cash flow to positive levels in 2019, the Anglo-Dutch company plans to increase drilling in the Permian, where production is relatively cheap and profitable in bearish markets. Per barrel costs can be as low as $15 in the Texas formation.
BHP is reversing big changes in its Australia profile, however. The company and its U.S. partner, ExxonMobil, decided to abandon the 20-month-long sales process of their joint ageing oil assets offshore Australia and will keep ownership and operation of the fields and associated infrastructure, the companies said last month, in what analysts see as a result of the higher oil prices compared to when the sales process was launched in mid-2016.
“After consideration of a range of options, we have currently decided to retain ownership and operation of these assets,” Exxon’s Australian unit, Esso Australia, said.
By Zainab Calcuttawala for Oilprice.com
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Zainab Calcuttawala is an American journalist based in Morocco. She completed her undergraduate coursework at the University of Texas at Austin (Hook’em) and reports on…