BP buys BHP’s US oil and gas assets

BP has announced that it will be buying BHP’s US shale oil and gasfields for US$10.5bn.

The acquisition will enable BP to gain high-quality oil assets and to shift its focus in the US to include more oil production, as recently its US business has mainly been gas production. The deal covers 190,000 ha of assets, including the Eagle Ford and Permian basins in Texas, as well as the gas-rich Haynesville region. BP’s US oil production alone should increase from 10,000 bbl/d to 200,000 bbl/d by the mid-2020s.

It is the largest acquisition that BP has made since the Deepwater Horizon disaster in 2010, which killed 11 workers and spilled 3m bbl of oil into the ocean. BP was forced to pay out more than US$65bn in damages.

Bob Dudley, BP group chief executive, 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. Given our confidence in BP’s future – further bolstered by additional earnings and cash flow from this deal – we are increasing the dividend, reflecting our long-standing commitment to growing distributions to shareholders.”

BP chief financial officer Brian Gilvary said:

“The financial repositioning we have delivered in recent years and the confidence we have in our outlook for free cashflow allow us to take this extremely attractive opportunity now without any adjustment to our financial frame. This is fully consistent with our commitment to financial discipline and creating value for shareholders. With our planned additional divestments and buybacks, we expect to deliver this major step forward for a net investment of around US$5bn.”