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BHP Billiton Acquires Petrohawk Energy Corp Gas Shale

BHP Billiton—the Australian mining giant—has its eyes set on the expanding U.S. natural gas shale reserves. However, since countries with l...

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|Jul 15|magazine29 min read

BHP Billiton—the Australian mining giant—has its eyes set on the expanding U.S. natural gas shale reserves.  However, since countries with large natural resource reserves tend to take a protectionary stance against foreign companies exploiting those resources, BHP has sought a loophole that seems to be becoming a popular trend for firms seeking entry into foreign territories.  The company has acquired U.S. shale gas and oil company Petrohawk Energy Corp for $12.1 billion, allowing the Australian firm entry to exploit U.S. shale plays.

The acquisition is the biggest in BHP Billiton’s history of mergers and acquisitions.  BHP will pay $38.75 a share through a tender offer that will begin July 25.  The price is 65 percent higher than Petrohawk’s closing price when the deal was announced. 

 

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Petrohawk’s shale holdings are positioned in three of the most promising shale formations in the U.S.:  the Eagle Ford, Haynesville and Permian Basin areas in Texas and Louisiana.

“Our offer and the associated substantial premium represent a unique opportunity for Petrohawk shareholders and recognize the growth opportunities embedded in its portfolio immediately,” Marius Kloppers,BHP’schief executive, said in a statement.

BHP will acquire roughly one million net acres of shale.  The land is estimated to yield a net production of 158,000 barrels of oil per day and proven reserves of 3.4 trillion cubic feet of natural gas equivalent.