ASX200 BHP Group Limited (ASX:BHP) Wraps up US$505 million Shenzi Transaction

  • November 09, 2020 01:11 PM AEDT
  • Team Kalkine
ASX200 BHP Group Limited (ASX:BHP) Wraps up US$505 million Shenzi Transaction

Summary

  • ASX 200 BHP Group Limited (ASX:BHP) concludes the Shenzi transaction to increase its interest from 44 per cent to 72 per cent.
  • The Company completed the Membership Interest Purchase and Sale Agreement with Hess Corporation for a consideration of USD 505 million.
  • BHP would upgrade its FY2021 petroleum production guidance to reflect the impact of the increased share and Tropical Cyclone Delta.
Gold MTF non-AMP

BHP Group Limited (ASX:BHP) shares climbed over 3 per cent on the ASX after the company announced the increase of its ownership in Shenzi via acquiring the interest from Hess Corporation. Currently, BHP’s total stake in Shenzi stands at 72 per cent.

Also Read: Iron Ore Prices Normalise: Australian Miners to Stay Profitable Over Volume Growth?

BHP Completes Shenzi Transaction

The completion of the deal seems to be uplifting the market sentiment around the stock with BHP gaining momentum. Recently, BHP inked a Membership Interest Purchase and Sale Agreement with Hess Corporation to acquire an additional 28 per cent interest for a consideration of USD 505 million.

  • Shenzi is a six-lease oil production development across the northern Gulf of Mexico, in which the miner held 44 per cent interest before this deal.
  • Furthermore, with the increased interest, Shenzi would now add 11,000 barrels of oil equivalent per day of production into the existing petroleum portfolio of the miner (as of the transaction closing date of 6 November 2020).
  • The current acquisition is in line with BHP’s long-term strategy of targeting counter-cyclical acquisitions in high-quality producing or near producing assets.

BHP To Upgrade FY2021 Production Guidance

BHP notified the shareholders that it would update the current petroleum production guidance of 95 million barrels of oil equivalent to 102 million barrels of oil equivalent during the second quarter of the financial year 2021; and,

  • The future petroleum production is anticipated to account for the increased share of the miner in the Shenzi oil-producing development.
  • Apart from the impact of increased share at the six-lease oil-producing development, the Company anticipates that the upcoming upgrade in the petroleum production guidance will reflect the effect of operational updates such as the impact of Tropical Cyclone – Delta at the Gulf of Mexico.

Tropical Cyclone – Delta Created Operational Challenges

Previously, BHP decided to temporarily shut down Shenzi and Neptune oil-producing development across the US-controlled Gulf of Mexico due to the Tropical storm Delta.

The threat from Delta prompted the Company to evacuate some non-essential workers, which the company fears might take a toll on future petroleum guidance that is due for the second quarter operational review.

Shenzi Partners – BHP Group and Repsol S.A.

With the completion of the acquisition, the Shenzi development will now have only two partners and operators, i.e., BHP Group Limited (ASX:BHP) with 72 per cent share and Repsol S.A. with 28 per cent ownership.

 

 


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