BHP’s shale portfolio is valued at 7.5 BUSD at 60 USD/bbl WTI

August 24, 2017


Author: Oleksii Shulzhuk, Senior Analyst

Today, August 22, BHP Billiton, the world’s top mining company and one of the leading US shale producers, has confirmed plans to sell its US shale assets. The decision was partly triggered in response to pressure from investors, including the hedge fund Elliot Management, who called for a divestment of a shale portfolio it saw as poorly timed and expensive, preferring the company to concentrate on its core business.

BHP Billiton communicated that it is now actively pursuing options to exit its shale business, which contributes less than 10% to its corporate valuation. Its shale portfolio comprises of assets spreading across Eagle Ford, Permian, and Haynesville that were acquired back in 2011 at the peak of oil prices as part of the Petrohawk acquisition, as well as Fayetteville assets acquired from Chesapeake. Both transactions totaled ca. 20 BUSD.

Rystad Energy estimates BHP’s US Onshore portfolio is valued at 7.5 BUSD at 60 USD/bbl WTI (5.1 BUSD at 50 USD/bbl). In a 60 USD/bbl scenario, Eagle Ford acreage has a value of 4.2 BUSD (Figure 1). The Black Hawk field – the sweet spot in the Eagle Ford Shale located in DeWitt and Karnes counties of Texas – is valued at 2.8 BUSD, while the Hawkville field in the condensate area of Eagle Ford at 1.3 BUSD.

BHP’s Permian Delaware acreage, located primarily in the northern part of Reeves County, TX and prospective for the Wolfcamp formation, is valued at 2.3 BUSD. We see companies like Anadarko, Oxy, Chevron, ExxonMobil, Shell and ConocoPhillips as potential suitors that could find synergies with their existing positions in those areas.

The remaining value comes from producing wells and acreage in the Haynesville and Fayetteville gas plays. Rystad Energy sees growth potential from gas production in the Haynesville play, LA., which should attract E&P companies seeking equity in gas for LNG export from the Gulf Coast, e.g. ExxonMobil with its Golden Pass project and Shell after the acquisition of BG.

Despite plans to exit the US shale business, which constitutes around 40% of BHP’s petroleum assets portfolio in the 60 USD/bbl price scenario, BHP Billiton remains committed to its conventional petroleum program, currently valued at 10.5 BUSD. This includes operations in the Gulf of Mexico, where BHP sees opportunities for significant growth in the long-term.

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Article Contact

Contact: David White, Marketing Manager
Phone: +47 24 00 42 00
david.white@rystadenergy.com

Oleksii Shulzhuk, Senior Analyst
Phone: +47 24 00 42 00
oleksii.shulzhuk@rystadenergy.com

 

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