Windfall gain for BHP shareholders
BHP shareholders are set for a windfall when the mining giant returns everything it makes from the near $15 billion sale of its US onshore oil and gas business in increased dividends or share buybacks.
Shares in BHP rose by more than 2 per cent yesterday — dragging the wider market higher — after it announced it had struck a deal to sell its unconventional petroleum business in the US to oil major BP for $14.6 billion.
The sale closes a chapter on one of the most disastrous overseas investments in Australian corporate history during which BHP poured $US40 billion into the asset it scooped up at the height of the US fracking boom in 2011.
RBC Capital Markets analyst Paul Hissey yesterday said the completion of the deal could “provide the clear air for a refresh of the BHP executive management group”.
BHP chief Andrew Mackenzie has been in the top job for five years and has dramatically simplified the Big Australian, having overseen the sale or spin-off of close to $24 billion in assets.
Former chief Marius Kloppers spent $US20 billion buy- ing into the US shale sector and the mining major spent $US20 billion developing the assets. The investment has drawn sustained fire from investors including US activist hedge fund Elliott Management which launched a highprofile campaign for BHP to get out of the US shale space.
BP will pay $US10.5 billion in cash for the bulk of the assets in its biggest acquisition for a decade. US oil and gas producer Merit Energy will pay $US300 million for the remainder.
Mr Mackenzie yesterday said: “We expect to return the net proceeds from the transactions to shareholders.
“We will confirm how and when at the time of completion of these transactions.”
The sale will result in BHP recording a further $US2.8 bil- lion impairment in its full-year results. The Melbourne-based miner expects to have most of the sale money by October.
UBS analyst Glyn Lawcock said the sale price was likely to be considered a positive by the market given he had expected the assets to sell for between $US8 billion and $US10 billion.
Shares in BHP gained 2.3 per cent yesterday to $34.30.