BHP BILLITON TO ACQUIRE PETROHAWK

BHP Billiton Ltd. (BHP), the world’s largest mining company, agreed to acquire Petrohawk Energy Corp. for $12.1 billion in cash to extend its shale oil production in the U.S.

Melbourne-based BHP will pay Petrohawk $38.75 a share, the two companies said today in a statement. That’s 65 percent more than the Houston-based company’s closing price on July 14.

The acquisition gives BHP three assets across about one million net acres in Texas and Louisiana. BHP agreed to pay $4.75 billion in cash in February for Chesapeake Energy Corp.’s Arkansas shale gas assets to tap growth in the U.S. gas market, the world’s biggest.

“Petrohawk has a focused portfolio of three world class onshore natural gas and liquids rich shale assets,” BHP Petroleum Chief Executive J. Michael Yeager said in the statement.

Petrohawk fell 1.8 percent to close yesterday at $23.49 at in New York. BHP fell 0.1 percent to A$43.60 at the 4:10 p.m. close of Sydney trading yesterday.

The purchase would be the largest acquisition of a U.S. exploration and production company since Exxon Mobil Corp. bought XTO Energy Inc. for $34.9 billion in 2009, according to Bloomberg data.

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Permalink Reply by Yogi Bear on July 15, 2011 at 1:29
I think the jury is still out on the XTO acquisition. Exxon will eventually strip out what it wants and get rid of the rest. As for Petrohawk, once BHP Billoton intergrates its assets into their system, they will get rid of some people and offices. Also, their need to develop will not be the same as Petrohawks's petrohawk paid too much money for leases and needed the cash flow. BHP Billoton will look at the price of gas and conclude that the return is not worth the cost and sit back and let the price increase.
Permalink Reply by Roy A Jones on July 15, 2011 at 1:39
Hmmmmmmm Step out drilling HUH?    That will be good for Bienville Parish east. Yepeee I knew it, One day they would move out with their drilling. Now this is IMO, So don't get excited.
Permalink Reply by Skip Peel - Mineral Consultant on July 15, 2011 at 1:40
I think it is likely the same for BHP Billiton as it was for Exxon Mobil in that much of the value they perceived in the acquisition was human capital, not just the raw hard assets.  The value of experience in shale drilling and completions is often overlooked.  The oil majors and energy related companies like BHP Billiton have not been active in shale related development and lack the in-house technical expertise to unlock the asset value.  Petrohawk has a strong track record as a very capable operator.  I think the technical knowledge, experience and capabilities of Petrohawk's employees contributed in a significant way to the 65% premium that BHP Billition paid.
Permalink Reply by JHH on July 15, 2011 at 2:08
It is curious that foreign owned companies are slowly investing in US assets. jhh
Permalink Reply by Skip Peel - Mineral Consultant on July 15, 2011 at 2:25
Global companies invest globally. And the next round of unconventional oil and gas plays that we see reported will be scattered all over the world.  Some of those will be explored and produced, if not discovered, by BHP Billiton led to some significant degree by ex-Petrohawk employees.  All international energy companies want what the American Independents have a lock on, people experienced in evaluating and developing unconventional reserves.
Permalink Reply by william g morrison jr on July 15, 2011 at 2:33
How much of this is liquids production based and how much gas?
Permalink Reply by JHH on July 16, 2011 at 15:12

You're right... it's not curious at all.  I was being a little rhetorical and sarcastic. I was thinking of using alarming... or a wake-up call for the industry... and even politicians who still can't seem to come up with an energy policy.

 

Permalink Reply by Tom Fowler on July 15, 2011 at 6:08

Analysts are saying BHP's plan is to actually increase drilling in areas where Petrohawk was actually cutting back.

http://fuelfix.com/blog/2011/07/15/how-the-bhppetrohawk-is-and-isnt...

Also, right now the only thing holding back meaningful onshore drilling in the U.S. is low gas prices, not regulation.

Permalink Reply by Skip Peel - Mineral Consultant on July 15, 2011 at 6:53
A BHP plan to retain as much of HK's expiring leasehold as possible makes perfect sense.  And I would expect them to look for opportunities to acquire more as long as it is strategically located.  Now is a good time to bargain shop.
Permalink Reply by Johnie Bravo on July 15, 2011 at 3:23

Well i thought Petrohawk was a solid company, Since they where building that big world Headquarters building in Shreveport off Fant Parkway!

 

Permalink Reply by Skip Peel - Mineral Consultant on July 15, 2011 at 3:33
Just as with XTO after being acquired by XOM, IMO, Petrohawk in the Haynesville Shale will change very little for lessors.  The Hawk has been permitting a slightly increased number of unit wells over the last months and I would expect that to continue in order to HBP as much of the original HA leasehold as possible.  No one knows what the long term implications may be but for the short term Petrohawk no longer has any financial constraints.  And that may translate to a rush to hold what they can and even take advantage of opportunities to acquire additional leasehold.  Petrohawk has the highest percentage of isolated units in the Play.  They could benefit by adding sections to make more consolidated operational areas.  All of which could be beneficial for many mineral owners.
Permalink Reply by Krkyoldhag on July 15, 2011 at 2:36
Not sure this good news. Canada didn't sell their reserves. Is it a good thing for that much of USA natural gas reserves (this and the Arkansas purchase by same company) to be owned by a foreign company? There goes our "energy independence" ..
Will it make the price go up on Natural gas at well head? Or will they just hold the reserves?
This company is in some pretty nasty legal battles right now.

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