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BHP Billiton enters US shale gas field
Source: Agencies |
February 23, 2011, Wednesday
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BHP Billiton said yesterday it agreed to buy a stake in a substantial shale field in the United States for US$4.75 billion - the first move by the world's biggest miner into the US shale gas business.
The shale assets form all of Chesapeake Energy Corp's interest in the Fayetteville shale field, in Arkansas, including the field's midstream pipeline system.
Shale deposits were previously considered uneconomic to extract gas from but technological advances and higher energy prices over the past several years have seen drillers tapping the vast amounts of natural gas in such deposits. More recently they have learned to adapt the new technology to also produce oil.
BHP said in a statement that it would fund the acquisition from its cash reserves. The Australian-based company's shares rose 1.6 percent in Sydney to A$46.58 (US$46.57).
"This transaction marks BHP Billiton's entry into the US shale gas business," BHP Billiton Petroleum chief executive Michael Yeager said. The deal will immediately make BHP Billiton a major North American shale gas producer, he said.
BHP Billiton will operate Chesapeake's current production activities from the field, which covers 197,086 hectares. The company described it as the second-largest position in one of the world's largest gas fields.
The field currently produces more than 11 million cubic meters of gas a day and includes development options that would substantially increase output over its estimated 40-year life.
Chesapeake said earlier this month that it would sell the assets as part of a plan to reduce debt and focus on more profitable regions.
The Oklahoma-based company says it hopes to bring in more than US$5 billion, before taxes, from asset sales.
The move will allow Chesapeake to focus more on higher-margin oil assets as oil prices spike and natural gas prices remain low.
The shale assets form all of Chesapeake Energy Corp's interest in the Fayetteville shale field, in Arkansas, including the field's midstream pipeline system.
Shale deposits were previously considered uneconomic to extract gas from but technological advances and higher energy prices over the past several years have seen drillers tapping the vast amounts of natural gas in such deposits. More recently they have learned to adapt the new technology to also produce oil.
BHP said in a statement that it would fund the acquisition from its cash reserves. The Australian-based company's shares rose 1.6 percent in Sydney to A$46.58 (US$46.57).
"This transaction marks BHP Billiton's entry into the US shale gas business," BHP Billiton Petroleum chief executive Michael Yeager said. The deal will immediately make BHP Billiton a major North American shale gas producer, he said.
BHP Billiton will operate Chesapeake's current production activities from the field, which covers 197,086 hectares. The company described it as the second-largest position in one of the world's largest gas fields.
The field currently produces more than 11 million cubic meters of gas a day and includes development options that would substantially increase output over its estimated 40-year life.
Chesapeake said earlier this month that it would sell the assets as part of a plan to reduce debt and focus on more profitable regions.
The Oklahoma-based company says it hopes to bring in more than US$5 billion, before taxes, from asset sales.
The move will allow Chesapeake to focus more on higher-margin oil assets as oil prices spike and natural gas prices remain low.
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