At a time when it is seeking to exit its thermal coal and some of its LNG interests, BHP is increasing its bet on the future of oil, paying $700 million to lift its stake in a large oil and gas field in the Gulf of Mexico.
BHP said its acquisition of the Hess Corporation’s 28% in the now mature Shenzi field brings its stake to 72% with Respol of Spain holding the remaining 28%.
In justifying the move BHP said it was consistent with its strategy of targeting “counter-cyclical” acquisitions in high-quality producing assets.
“We are purchasing the stake in Shenzi at an attractive price, it’s a tier-one asset with optionality and key to BHP’s Gulf of Mexico heartland,” Geraldine Slattery, BHP’s president of petroleum operations said in the Tuesday announcement to the ASX.
“As the operator, we have more opportunity to grow Shenzi high-margin barrels and value with an increased working interest.”
BHP’s newish CEO, Mike Henry has driven the exit from thermal coal but wants to hold on to its coking coal involvement, especially in Queensland and NSW.
But he is also looking to sell the 50% stake in the Bass Strait oil and gas fields which was the company’s foundation asset in its petroleum business after the first strike in 1966. Exxon Mobil, the other 50% holder, is also looking to quit its stake.
And Mr. Henry has indicated that BHP will be quitting its stake in the $34 billion North West Shelf joint-venture in Western Australia where Woodside Petroleum is the operator and major partner.
But oil plays remain hot for bHP< or rather well-placed and not aging oil projects and prospects.
He continues to see positive growth and returns in oil investments for “at least the next decade” and would continue to explore opportunities.
“Even low-case forecasts are for the world to consume another trillion barrels of oil over the next 30 years,” Mr Henry said earlier this year. “And that’s relative to 900 billion over the past 30 years.”
Shenzi is a six-lease development in the Gulf of Mexico that started producing in 2009 with a nominal capacity of 100,000 barrels of oil a day and 50 million cubic feet of gas.
BHP is buying a 28% stake that brings in 11,000 barrels a day, meaning Shenzi’s output is now running around 40,000 barrels a day.