BHP has signed an agreement with Hess Corporation to acquire an additional 28 per cent interest in Shenzi, a six-lease development in the deepwater Gulf of Mexico, for $US505 million ($703 million).
As a result of the acquisition, BHP’s interest in the project will be increased to 72 per cent and immediately add 11,000 barrels of oil equivalent per day of production.
BHP president petroleum operations Geraldine Slattery said the transaction aligned with the company’s plans to enhance the company’s petroleum portfolio by targeted acquisitions in high quality production deepwater assets.
“We are purchasing the stake in Shenzi at an attractive price, it’s a Tier 1 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,” Slattery said.
The effective date of the transaction is July 1, 2020 with an expected close by December 2020, subject to the satisfaction or waiver of conditions.
In addition, the company stated that the transaction consistent with its strategy of targeting counter-cyclical acquisitions in high-quality producing or near producing assets.
“We continue to believe that the fundamentals for oil and advantaged gas will be attractive for the next decade and likely beyond,” BHP stated.
The Shenzi oil and gas field lies in the Gulf of Mexico in Green Canyon blocks 609, 610, 653, and 654, and holds an estimated recoverable reserves of between 350 million and 400 million barrels of oil equivalent.
BHP announced its first oil and natural gas production from the Shenzi development in March 2009, where it exceeded its capacity during September 2009 and produced 120,000 barrels a day against its capacity of 100,000 barrels a day.
Prior to the deal, Shenzi was a joint venture between BHP (44 per cent, operator), Hess (28 per cent) and Repsol S.A. (28 per cent).