SYDNEY (AFP) – Mining giant BHP Billiton is set to sell some of its shale gas assets in the United States, closing the chapter on a controversial acquisition three years ago that sparked a multi-billion dollar writedown.
The chief executive of the world’s biggest miner, Andrew Mackenzie, said BHP was looking to sell its Fayetteville shale gas assets in Arkansas.
“As we look to improve the balance of liquids and gas across our Petroleum portfolio we have initiated the marketing (of) our Fayetteville acreage,” Mackenzie said in a statement late Tuesday.
“However, we will only divest the field if it maximises value for shareholders.”
BHP acquired Fayetteville from Chesapeake Energy as part of a $4.75 billion deal in February 2011.
But plunging US gas prices forced the Anglo-Australian miner to book a $2.84 billion writedown on the value of the Fayetteville assets in August 2012, with then chief executive Marius Kloppers forgoing his annual bonus.
BHP instead concentrated on its more profitable shale liquid assets.
“In the Eagle Ford and Permian (US shale assets) we are forecasting liquids production of approximately 200 thousand barrels per day by the 2017 financial year,” Mackenzie said.
“This is expected to generate significant value as investments in our liquids-rich onshore US wells typically generate returns of over 50 per cent.”
BHP would also “fully develop” its other shale gas asset at Haynesville, petroleum boss Tim Cutt told an investor briefing in London on Tuesday.
“The Haynesville is the premier dry gas asset in our portfolio, and one of the most prolific shale gas assets in North America,” Cutt said.
“We are moving towards full development now, and we will be in full development during the five-year plan.”
Macquarie analysts questioned the timing of the sale but said it could point to BHP’s growing confidence about the output from the Permian region.
“This is perhaps a strange time to be considering such a sale given anticipated gas demand growth from imminent LNG exports, petrochemicals and the like,” Dow Jones quoted the analysts as saying.
“Indeed, this could be another instance of BHP misreading the outlook for the US gas market.”
Shares in BHP were down 1.72 per cent to Aus$33.23 at midday on the ASX 200 on Tuesday.
The potential Fayetteville sale comes two months after BHP announced a plan to create a new independent company by demerging non-core assets, including some of its aluminium, coal, manganese, nickel and silver operations.
BHP in August reported a 23.2 per cent jump in annual net profit to $13.83 billion.