BHP (LON:BHP), the oil and gas extraction company listed by FTSE 100, announced on Tuesday it agreed to acquire an additional 28% stake in the Gulf of Mexico Shenzi oil field.
The company said it has signed a membership interest and sales agreement with Hess Corporation (NYSE: HESS) and has acquired the company’s six leases, a deep sea development.
Before the deal was made, Shenzi stood as a jointly owned site. Hess held 28%, Respol held 28%, and BHP served as an operator at 44%.
The agreed $505 million deal will increase its BHP interest to up to 72%, and will soon add about 11,000 barrels of oil per day to the company’s production.
The company added that the transaction is “in line with our strategy of targeting anti-cyclical acquisitions in high-quality production or nearby production assets.” It added that it suits the potential medium-term benefits of the commodity cycle, and that I believe oil and gas will “become attractive for more than a decade or so.”
The Shenzi transaction will take place in the beginning of July and is expected to close by December.
BHP response
Commenting on the acquisition news, Geraldine Slattery, president of the company’s oil business, said:
“This transaction is in line with plans to strengthen our oil portfolio with targeted acquisitions and continued departure from growth options with high-quality deep-sea assets.”
“We are buying Shenzi stocks at attractive prices. This is a Tier One asset with options and is key to BHP’s Gulf of Mexico Heartland. As operators, we have more opportunities to increase the barrel and value of Marjon, increasing work interest and value.”
Investor’s Notes
After the update, BHP shares were dependent on the share of 1,651.40pa 06/10/20 11:38 BST, down 0.073% or 1.20p during morning trading.
The analyst currently has a “buy” rating of a majority of BHP stock, with a target price of 1,825p. MarketBeat’s community has a “low-performance” stance of 53.22% on its stock. Its P/E ratio is 11.98, below the average 36.46 for the basic materials sector.
