BHP bets on shale gas with $12.1-bn Petrohawk acquisition

BHP Billiton, the world's biggest diversified miner, today said it will acquire US gas producer Petrohawk Energy Corp, for $12.1 billion in cash, a move aimed at expanding into the booming shale-gas industry.

The proposed acquisition comes less than four months after the Anglo-Australian company had acquired the Fayetteville shale gas holdings in Arkansas from the second-largest producer of natural gas in the US, Chesapeake Energy, in February 2011, for $4.75 billion. (See: BHP Billiton to acquire Chesapeake Energy's shale gas assets for $4.75 billion) 

BHP Billiton's deal is pitched at $38.75 per Petrohawk share, a premium of 65 per cent to the Houston-based company's average price over the past 20 trading days.

The transaction, which has been unanimously recommended by the board of Petrohawk, represents a total equity value of approximately $12.1 billion and a total enterprise value of approximately $15.1 billion, including the assumption of net debt.

The deal would be the largest acquisition of a US exploration and production company since Exxon Mobil bought XTO Energy for $34.9 billion in 2009, according to Bloomberg data.

The transaction would give BHP Billiton with operated positions in the Eagle Ford and Haynesville shales, and the Permian Basin. Petrohawk's assets cover approximately 1,000,000 net acres in Texas and Louisiana, with estimated 2011 net production of approximately 950 million cubic feet per day, or 158 thousand barrels of oil equivalent per day.

At year-end 2010, Petrohawk reported proved reserves of 3.4 trillion cubic feet of natural gas equivalent. The company has a current non-proved resources base of 32 cubic feet for a total risked resource base of 35 cubic feet.