BHP today announced that it has signed a Membership Interest Purchase and Sale Agreement with Hess Corporation (Hess) to acquire an additional 28 per cent working interest in Shenzi, a six-lease development in the deepwater Gulf of Mexico. Shenzi is structured as a joint ownership: BHP (Operator, 44 per cent interest); Hess (28 per cent interest) and Repsol S.A. (28 per cent interest).
BHP and Hess have agreed to a purchase price of US$505 million, subject to customary pre and post-closing adjustments.
The acquisition would bring BHP’s working interest to 72 per cent and immediately add approximately 11,000 barrels of oil equivalent per day of production (90 per cent oil).
This transaction is consistent with our strategy of targeting counter-cyclical acquisitions in high-quality producing or near producing assets. While our strict Capital Allocation Framework tests ensure all investments are resilient to low points in the commodity cycle, we also recognise the potential for price upside over the medium term given the global slowdown in development activity, and we are well positioned to participate in that upside. We continue to believe that the fundamentals for oil and advantaged gas will be attractive for the next decade and likely beyond.
BHP President Petroleum Operations, Geraldine Slattery said: “This transaction aligns with our plans to enhance our petroleum portfolio by targeted acquisitions in high quality producing deepwater assets and the continued de-risking of our growth options. We are purchasing the stake in Shenzi at an attractive price, it’s a tier one asset with optionality, and key to BHP’s Gulf of Mexico heartland. As the operator, we have more opportunity to grow Shenzi high-margin barrels and value with an increased working interest.”
The effective date of the transaction is 1 July 2020 with an expected close by December 2020, subject to the satisfaction or waiver of customary and transaction-specific conditions.
Source: BHP
Hess also announced…
Hess Corporation announced that it has entered into an agreement to sell its 28% working interest in the Shenzi Field in the deepwater Gulf of Mexico to BHP Billiton, the field’s operator, for a total consideration of $505 million, subject to customary adjustments, with an effective date of July 1, 2020. The field produced an average of 11,000 net barrels of oil equivalent per day in the first eight months of 2020.
“Proceeds will be used to fund our world class investment opportunity in Guyana,” CEO John Hess said. “This sale is aligned with our strategy to preserve cash and preserve the long term value of our assets in the current low oil price environment.”
The transaction is expected to close before year end 2020 and is subject to customary closing conditions.
Source: BusinessWire
