BHP may shed shale gas assets

BHP Billiton is holding discussions with competitors on the future of parts of its US shale business amid heightened scrutiny of the unit from shareholders, including activist investor Elliott Management.

BHP Billiton is holding discussions with competitors on the future of parts of its US shale business amid heightened scrutiny of the unit from shareholders including activist investor Elliott Management.

The company recognised it needed alternative strategies for some of the assets, particularly gas-focused operations, CEO Andrew Mackenzie said on Monday. There were multiple potential owners of assets in the states of Texas, Arkansas and Louisiana, he said.

“We are in regular dialogue with those natural owners as to whether or not we can form more collaboration to allow us to share facilities, to drill longer wells and therefore have higher-productivity wells,” Mackenzie said. “However, they may have a value of what we hold that’s significantly in excess of our estimates based on what we know we can do.”

In May, Mackenzie said BHP was prepared to discuss potential sales of US shale assets acquired in 2011 in deals amounting to about $20bn.

Assets in the Delaware Basin would appear to be a “strong strategic fit” for Anadarko Petroleum, JPMorgan Chase analysts wrote in a note in May.

Tom Ward, co-founder of Chesapeake Energy, said in April he might be interested in reviewing the Fayetteville operations in Arkansas with new company Mach Resources.

BHP’s entry into shale is among decisions that have drawn criticism from Elliott Management, which has also attacked BHP over failed exploration and poorly timed share buybacks that the fund contends have destroyed $40bn in value.