Anglo-Australian mining giant BHP Billiton Ltd (BHP) announced the acquisition of the U.S. natural-gas company, Petrohawk Energy for a whopping $12.1 billion, providing greater access to the U.S. shale gas assets. The deal marks greater exposure for BHP in the world's largest energy market, broadening the company’s geographic and customer spread.
According to the deal, BHP would pay $38.75 for each Petrohawk share in an all-cash tender offer. The total value of the deal is $15.1 billion, including Petrohawk's debt assumptions. The company expects the transaction to close in the third quarter of calendar year 2011.
The acquisition is anticipated to provide BHP with access to Petrohawk’s U.S assets, covering about one million acres in Texas and Louisiana, in the Eagle Ford and Haynesville shales, and the Permian Basin, with an estimated 2011 production of 950 million cubic feet equivalent per day or 158,000 oil-equivalent barrels per day.
The deal offers substantial premium for Petrohawk shareholders along with the growth opportunities. In addition, BHP anticipates retaining Petrohawk's sizeable U.S. workforce.
Earlier this year, BHP paid nearly $4.8 billion to acquire stake in a shale gas field in Arkansas from Chesapeake Energy, which marked BHP's first move into the rapidly growing U.S. shale gas business.
BHP Billiton is one of the world’s largest diversified resource companies operating in mineral exploration, production and processing, oil and gas exploration and development, and steel production and merchandising. The company contests directly with its peers, such as Alcoa. Inc (AA), Vale S.A (VALE).
We currently maintain a long-term Outperform recommendation on the stock. BHP Billiton has a Zacks #1 Rank, which translates into a short-term Strong Buy rating (1-3 months) based on its key investment strategy.
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