BHP (NYSE: BHP) reported Tuesday that it will acquire an additional 28-percent working interest in the Shenzi field in the deepwater Gulf of Mexico (GOM) from Hess Corp. (NYSE: HES).
The $505 million acquisition will raise BHP’s working interest in the six-lease development to 72 percent. The current Shenzi joint ownership includes BHP (operator, 44-percent interest), Hess (28 percent) and Repsol S.A. (OTCMKTS: REPYY) (28 percent).
“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,” remarked Geraldine Slattery, BHP’s president for petroleum operations, in a written statement. “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.”
According to BHP, increasing its Shenzi stake aligns with the company’s “strategy of targeting counter-cyclical acquisitions in high-quality producing near producing assets.” The firm noted that it foresees “attractive” fundaments for oil and advantaged natural gas “for the next decade and likely beyond.”
BHP also stated the acquisition will immediately add approximately 11,000 barrels of oil equivalent per day of production (90-percent oil).
Hess is selling its 28-percent interest in Shenzi to provide funds for activities in Guyana, the company noted in a separate written statement Monday. It owns a 30-percent interest in the Exxon Mobil Corp. (NYSE: XOM)-operated Stabroek Block offshore the South American country.
“This sale is aligned with our strategy to preserve cash and preserve the long-term value of our assets in the current low oil price environment,” commented Hess CEO John Hess.
Hess and BHP stated the transaction will have an effective date of July 1, 2020, adding that customary closing conditions apply to the purchase price. They expect to close the deal by the end of this year.
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