On 1 November 2018, BHP Billiton (ASX: BHP) made an announcement regarding the completion of the sale of its interests in the Eagle Ford, Haynesville and Permian Onshore US oil and gas assets to BP America Production Company for a gross consideration of US$10.5 billion. Following the release of this news, the share price of the company increased by 2.794 percent as on 1 November 2018.
BP America Production paid one-half of the gross consideration at completion and the remaining amount will be paid in six equal instalments over a six-month period, the first instalment to be paid one month after completion. BHP is planning to return the proceeds from the sales to its shareholders by an off-market buy-back and a special dividend. The program will start immediately with BHP targeting an off-market buy-back of A$7.3 billion of BHP Billiton Limited shares under which BHP Billiton Limited can buy back shares at up to a 14% discount. The remaining net proceeds will be paid to the shareholders in the form of special dividends.
It is expected that all the shareholders will be benefitted from the Off-Market Buy-Back as for some BHP shareholders, the after-tax return from participating in the Off-Market Buy-Back may be higher than the return from the sale of their shares on-market and further the Off-Market Buy-Back is expected to improve return on equity, cash flow per share and earnings per share for all shareholders who continue to hold shares in BHP. After the completion of the Off-Market Buy-Back, the company is planning to determine the Special Dividend on 17 December 2018.
The company also announced that Moody’s Investors Service which is a credit rating agency has upgraded the long-term issuer ratings of BHP Billiton Limited and BHP Billiton Plc from A3 to A2, and the short-term commercial paper ratings from P-2 to P-1.
In FY 2018, the total revenue of the company uplifted from $36,135m in FY 2017 to $43,638m. The profit from operations of the company increased from $12,554m in FY 2017 to $15,996m in FY 2018. The loss after tax from discontinued operations increased from $472m in FY 2017 to $2,921m in FY 2018. The net cash flow from operating activities uplifted from $16,804m in FY 2017 to $18,461m in FY 2018, which is reflecting higher commodity prices and a strong operating performance during the year. In FY 2018, the company announced the highest ever final dividend of 63 cents per share and returned $6.3bn to its shareholders in the form of dividends.
In the last six months, the share price of the company decreased by 3.07 percent as on 31 October 2018, traded at a PE level of 34.200x. BHP’s shares traded at $33.110 with a market capitalization of circa $103.45 billion as on 1 November 2018 (AEST 4:00 PM).
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