BP back in American market with £8bn BHP shale deal

BP is laying a $10.5bn (£8bn) bet on the US shale revival through a deal with BHP Billiton to buy the assets which crippled the Australian miner with write-downs of at least $20bn.

BP’S first major US deal since it was mired in the Deepwater Horizon scandal in 2010 will see the oil major take control of BHP’S Petrohawk Energy Corporation, which operates three of the most prolific shale basins in the US.

The oil-rich Permian and Eagle Ford basins in Texas and the Haynesville gas basin, which lies across the border of Texas and Louisiana, hold about 4.6bn barrels of oil equivalent and could produce 190,000 barrels a day. The move underlines the increased appetite for shale among producers after the price of oil rebounded from 12-year lows.

BP will keep hold of the basins’ best wells and prune off between $5bn to $6bn worth of assets to sell on to shalehungry investors and help finance a string of shareholder sweeteners.

BP promised to increase its dividend payouts by 2.5pc to 10.25p for the first time since oil prices went into freefall in late 2014, and will add an extra $5-6bn to its share buy-back plans.

BP will pay half of the fee upfront and the rest in six, monthly, instalments, funded by a series of equity issues which are expected to weaken its already lagging share price.