BHP Billiton to sell Fayetteville natural shale gas assets
28 October 2014
BHP Billiton, the world's largest mining company, yesterday said that it is planning to sell its Fayetteville, Arkansas, onshore natural shale gas assets, just two years after it spent billions of dollars in acquiring it.
''As we look to improve the balance of liquids and gas across our Petroleum portfolio we have initiated the marketing of our Fayetteville acreage. However, we will only divest the field if it maximises value for shareholders,'' said, Andrew Mackenzie, CEO of BHP Billiton.
BHP Billiton entered the US shale gas market in early 2011 by acquiring the Fayetteville shale gas holdings in Arkansas from Chesapeake Energy for $4.75 billion and followed it up a few months later by buying Petrohawk Energy for about $12.1 billion.
But a few months after investing around $17 billion in US shale gas assets, natural gas prices in the US hit rock bottom and is now selling at about $3.60 per thousand cubic feet, compared to $4.27 when BHP Billiton announced that it would acquire Petrohawk and $14 per thousand cubic feet in 2005.
The company wrote down wrote down the Fayetteville shale gas by $2.8 billion a year later when gas prices fell to about $2.00 per thousand cubic feet and saw its then CEO Marius Kloppers lose his bonus that year.
The Anglo-Australian miner has over 20 producing assets in the oil and gas sector, with a mix of crude oil, natural gas and shale gas.
BHP Billiton not only made some big-ticket acquisitions in the Fayetteville, but also in the Haynesville/Bossier, Eagle Ford and the Permian Basin shale gas acreages in the US.
It is also the operator in two blocks in the Gulf of Mexico. It also has other development projects in the Philippines, India, Trinidad and Tobago, Algeria, Pakistan, and Malaysia.
In March 2013, BHP Billiton, announced that it plans to sell about 10 assets in order to reduce debt and simplify its operations.