BHP to buy out Hess share of Shenzi

The FTSE 100 company said Shenzi is structured as a joint ownership, with BHP being the operator with a current interest of 44%, while Hess owns 28% and Repsol holds another 28%.

It said it had agreed to a purchase price of $505m, subject to customary pre and post-closing adjustments.

The board said the acquisition would bring its working interest to 72%, and immediately add around 11,000 barrels of oil equivalent per day of production at 90% oil.

It said the transaction was consistent with its strategy of targeting counter-cyclical acquisitions in high-quality producing or near producing assets.

The board said that, while its strict capital allocation framework tests ensured all investments were resilient to low points in the commodity cycle, it also recognised the potential for price upside over the medium term given the global slowdown in development activity, adding that the company was “well-positioned” to participate in that upside.

BHP said it believed that the fundamentals for oil and advantaged gas would be attractive for the next decade, and likely beyond.

“This transaction aligns with our plans to enhance our petroleum portfolio by targeted acquisitions in high quality producing deepwater assets and the continued de-risking of our growth options,” said the company’s president of petroleum operations, Geraldine Slattery.

“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.

“As the operator, we have more opportunity to grow Shenzi high-margin barrels and value with an increased working interest.”

At 0841 BST, shares in BHP Group were down 0.23% in London, at 1,648.8p.