BP to acquire US oil and gas assets from BHP for $10.5bn

BP’s subsidiary BP American Production Company has signed agreements to acquire BHP’s entire interests in the Eagle Ford, Haynesville, and Permian onshore oil and gas assets in the US, in a $10.5bn deal.

According to the deal, the BP arm will buy all of the issued share capital of BHP’s subsidiary Petrohawk Energy that holds the onshore assets.

Through the acquisition, BP hopes to upgrade and reposition its US onshore oil and gas business, with access to production and resources in the liquids-rich regions in Texas and Louisiana.

The transaction includes assets with 470,000 net acres of licences, including a new position in the liquids-rich Permian-Delaware basin, as well as two premium positions in the Eagle Ford and Haynesville basins.

It will add current production of 190,000 barrels of oil equivalent a day (boe/d), and 4.6 billion barrels of oil equivalent (bboe) resources to BP’s portfolio.

Upon closure of the deal, which is subject to regulatory approvals and slated to take place by the end of October, BP will make a $5.25bn cash payment from existing resources, with the remaining $5.25bn set to be offered in deferred payments in six equal instalments over six months.

BP Group chief executive Bob Dudley said: “This is a transformational acquisition for our Lower 48 business, a major step in delivering our upstream strategy and a world-class addition to BP’s distinctive portfolio.”

The transaction will also enable BP to increase the liquid hydrocarbon proportion of its production and resources in the US onshore to 27% of production and 29% of resources.

Once the transaction is completed, BP intends to divest certain assets in the upstream segment in a bid to generate around $5-6bn, which is in addition to the company’s ongoing divestment programme of around $2-3bn per annum.

BP currently produces around 315,000boe/d from seven oil and gas basins with resources of 8.1bboe.

In a separate transaction, BHP agreed to sell its Fayetteville assets to MMGJ Hugoton III for $0.3bn.