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 Skip Peel - Mineral Consultant on July 21, 2011 at 3:02
They do that through a "blob map"?  LOL!
Permalink Reply by The_Baron on July 21, 2011 at 4:40
I think that they manipulate data and extrapalte what their leaseholds could produce so when they talk to stockholders and/or potential buyers they can say we have X amount of undrilled acreage and look where it is and make it look like they have this great big untapped asset.
Permalink Reply by Spring Branch,mineral owner on July 21, 2011 at 8:21
You would have a hard time convincing me that there is not an 8 Bcf contour that circles an area of San Augustine and Nacogdoches Counties and may take in some of the east portion of Angelina County.
Permalink Reply by Charles Bowman on July 21, 2011 at 7:59

Landowners should be ready for bonus and royalty rates to go down tremendously! Once the international oil and gas companies buy up the competition, they will not be forced to bid against other smaller companies for the Haynesville shale leases. The majors will offer a set price and tell the landowners to take it of leave it. Then if you hold out the majors will bribe the government to use the law of imminent domain to legally take your minerals because of the tax revenue it would produce. Landowners and mineral owners better join together in an effort to stop this before it starts.  

Permalink Reply by Shale Wizard on July 21, 2011 at 8:21

Charles,

 

Why would anyone use imminent domain, we would just drill the well and have you as an unleased mineral owner.  we would get your share until the well reaches payout at which point we would pay you 8/8ths less your share of the expenses.  No need for imminent domain.  I am constantly amazed by all the people that have made a literal fortune from oil and gas drilling that still think the oil and gas companies are out to get them.  Stick with a reputable company when doing your business, there is a reason some companies stay around while others disappear. 

Permalink Reply by Aubrey C. Sanders, Jr. on July 21, 2011 at 10:20

Wizard, the last sentence you wrote above is the best advice anyone can get. I keep a list

of O&G companies that I will not do any business whatever with. In 50 years that list has gotten quite long. Fortunately many of them have disappeared. Unfotunately the lef behind ravaged landscape and unplugged (orphaned) wells. Damage to my parents land (now mine) was terrible.

I always get a bit anxious when the big companies start to farmout leases to unknown companies.

Thankfully we do not see the big salt flats as a result of salt water disposal onto the land as we did in 30's  into the 50's.

Permalink Reply by Kat Bloomfield on July 21, 2011 at 13:52
I think fear of the unknown fuels suspicions, whether in business or in life. This site exemplifies the equalizer that is knowledge. But, admittedly, too, sometimes too much knowledge is just that--too much.
Permalink Reply by Kat Bloomfield on July 21, 2011 at 15:30
And if he did, why?
Permalink Reply by Joe Aldridge on July 21, 2011 at 16:12

Kat, I think that was a compliment. I agree with you too much information breeds suspension.

On the other hand I ran into a situation with a major in the 80's where I had 300+ acres in the middle of their block and they would not deal with me. At that time I felt I was high in price but reasonable. I had an independent land man that I was dealing with and I think they found out who it was and threatened him because he never came back and finalized the deal. It got to the point that if I would not deal with them on their terms then no one else was going to deal with me. So yes I do have a concern that with the Independents being bought out that there is going to be less competition, lower bonus, lower royalty, etc.  and an attitude of its my way or we'll sit on you and show you who the BOSS is. That will be the prevailing attitude. It will be the same situation we had back then in the 80's. That is my concern. 

Permalink Reply by keb on July 23, 2011 at 13:20
Charles, please explain what percent is the "8/8th"? call me slow...lol
Permalink Reply by Skip Peel - Mineral Consultant on July 21, 2011 at 8:30
The government, in this case the State of Louisiana, does not use eminent domain to take minerals.  There is no need to as there are force pooling provisions in the Mineral Code.  And those force pooling statutes provide protections for the mineral owners affected that is superior to mineral codes in other states.  Royalty rates are not and will not go down IMO.  Current bonus offers in the $4K to $2K range will likely decline very little.  Where operators need to mop up unleased acreage where drilling is ready to commence the higher end of the range will be appropriate.  I have knowledge of one such recent offer that was $6K.  Where "step out" leasing occurs the lower end of the range should be roughly accurate.  The specifics of a mineral tract are always important to the value.  There is no such thing as a "Going Rate" unless it is the least amount being offered in a general area.
Permalink Reply by JHH on July 21, 2011 at 10:00
There are still plenty of O/G companies who want to lease and will pay fair price.

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