BHP Billiton Announces Acquisition Of Chesapeake Energy Corporation's Fayetteville USA, Shale Assets
22 February 2011
BHP Billiton today announced it has agreed to acquire all of Chesapeake Energy Corporation's (Chesapeake) interests in the Fayetteville Shale, USA, including the midstream pipeline system, for US$4.75 billion, which BHP Billiton expects to fund from the Group's cash resources.
The acquisition is consistent with BHP Billiton's strategy of investing in large, long-life, low cost assets with significant volume growth from future development. It also supports our goal of diversification by geography, customer and product. BHP Billiton will become the operator of Chesapeake's operated interests in the field.
Chesapeake's Fayetteville shale assets include approximately 487,000 acres of leasehold and producing natural gas properties located in Arkansas, USA. This is the second largest position in one of the largest gas fields in the world. This acquisition will increase BHP Billiton's net reserve and resource base by 45 per cent. These assets currently produce over 400 million cubic feet of gas per day and include development options that will support substantially higher production over a 40 year operating life. BHP Billiton and Chesapeake have also agreed a 12 month services agreement to ensure the safe transfer of operations to BHP Billiton.
The assets acquired generate strong margins and returns on capital at today's prices. Depending on regulatory approvals, BHP Billiton expects to close in the first half of 2011.
"The Fayetteville Shale is a world-class onshore natural gas resource," said J. Michael Yeager, Chief Executive of BHP Billiton Petroleum. "This transaction marks BHP Billiton's entry into the US shale gas business. The operated position we are obtaining will immediately make BHP Billiton a major North American shale gas producer. It provides access to a competitive, long-life resource basin that benefits from our ability to invest through the economic cycles. Longer term, the expertise we gain here will be usable elsewhere as we continue to grow our business."
CAPITAL MANAGEMENT PROGRAM - A$5 BILLION OFF-MARKET BUY-BACK
BHP Billiton also announces an Off-Market tender Buy-Back (Off-Market Buy-Back) of BHP Billiton Limited shares that will form an important part of its expanded US$10 billion capital management program (see separate announcement). The Off-Market Buy-Back, with a target size of A$5 billion but which BHP Billiton Limited may vary at its discretion, will commence immediately in accordance with the Off-Market Buy-Back timetable, which is separately available. The On-Market Buy-Back of BHP Billiton Plc shares will continue, including over the period of the Off-Market Buy-Back process
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