Top Australian miner BHP is increasing its bet on the future of oil, shelling out $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 per cent in the Shenzi field, which brings its stake to 72 per cent, 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,” said Geraldine Slattery, BHP’s president of petroleum operations.
“As the operator, we have more opportunity to grow Shenzi high-margin barrels and value with an increased working interest.”
The deal, which BHP said would allow it to add about 11,000 barrels of oil equivalent a day to its portfolio, comes after global oil prices collapsed and remain subdued as pandemic-related travel restrictions slash demand for fuel. The benchmark Brent crude oil price, which collapsed from $US65 a barrel at the start of the year to below $US20 a barrel in April, is now trading around $US40. The US benchmark, West Texas Intermediate crude, is selling for $US39.44 a barrel.
BHP chief executive Mike Henry this year has embarked on plans to clean up the miner’s portfolio including seeking to sell several coal mines and its stake in the Bass Strait oil and gas fields off Victoria’s coast. He has also flagged BHP would unlikely remain a long-term partner in the $34 billion North West Shelf joint-venture in Western Australia.
However, Mr Henry has said 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. Following the company’s acquisition of Hess Corporation’s shares, BHP’s remaining partner in the venture will be Spain’s Respol with 28 per cent.
“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.” Ms Slattery said.
As a petroleum supplier, BHP has been closely studying the electrification of the global transport sector as the mega-trend raises big questions about future demand for its resources. Mr Henry has launched plans to boost BHP’s exposure to the “future-facing” commodities nickel and copper, which are expected to greatly benefit from electrification due to their use as ingredients in electric batteries.
Shares in BHP rose 0.3 per cent on Tuesday to end the day trading at $36.28.
Source: Thanks smh.com