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Blackstone-backed Bluewater on BHP’s radar

  • March 29, 2019 05:05 PM AEDT
  • Team Kalkine
Blackstone-backed Bluewater on BHP’s radar

The street talks tell us about the BHP’s potential interest in the sale of Blackstone-backed oil exploration joint venture Bluewater.

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The market believes that BHP Group Limited (ASX: BHP) is among the prospective bidder for the joint venture project owned by Blackstone Group LP and LLOG Exploration Co, Bluewater. The project yet not launched for sale in the market is expected to fetch approximately $1.5 billion-$2 billion in a sale.

Bluewater is a deep-water oil exploration project in the United States Gulf of Mexico that is now being looked upon for sale as the crucial players in the region are trending towards the re-deployment capital program to invest in other potential areas. However, the JV partners Blackstone Group LP and LLOG Exploration Co. have not reached an agreement to sell the asset to date.

BHP Group Limited sits at the top of global miners’ list while it rapidly escalates its interest in oil and gas sector. The Group makes a notable contribution to the global oil and gas demand and is positioned as one of the largest producers in the Gulf of Mexico.

BHP reported petroleum exploration expenditure of US$316 million for the half year ended 31 December 2018 including US$166 million being expensed during the period. The explorer informed that activity for the period was largely focused in the US Gulf of Mexico, Trinidad & Tobago and Mexico.

On 13 February 2019, the BHP Board approved an investment of US$0.7 billion (BHP share) for the development of the Atlantis Phase 3 project in the deepwater Gulf of Mexico. The project includes a subsea tie back with the potential to increase production by an estimated 38,000 barrels of oil per day at its peak from eight new production wells.

BHP is further progressing with its new petroleum production facility, Mad Dog Phase 2 in the US Gulf of Mexico, that has the capacity to produce maximum of 140,000 gross barrels of crude oil per day. It is 37% complete and expected to commission production by CY2022, as per BHP’s 1HFY19 report.

Looking forward, BHP has posted a positive outlook for crude oil on the back of escalating demand from the developing world and natural field decline in supply.

BHP Chief Executive Officer, Andrew Mackenzie, stated that BHP is backed by an outstanding portfolio of development opportunities. Its recent approval for Atlantis Phase 3 project and the West Barracouta in petroleum and early success in its oil and copper exploration programs underlines the company’s potential to increase shareholder value and returns.

BHP is trading at its higher level on ASX as the stock edged up 0.654% to trade near to its 52-week high on 29 March 2019. The stock closed as at $38.490 with a Price to earnings multiple of 26.170x and a market capitalisation of $112.65 billion as at 29 March 2019. Over the past 12 months, the stock has returned 39.11% including the positive price change of 17.47% in the past three months.

Also Read: BHP Group Reported a Decline of 8% in its Underlying Attributable Profit for H1 FY19


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