The oil giant BP buys $ 10.5 billion worth of American shale assets from the mining company BHP Billiton since its purchase in 2011 for $ 20 billion.
Commenting on the company's largest acquisition since 1999, BP CEO Bob Dudley describes the acquisition as "a transformational acquisition" and "a world-class addition." [19659001] So, beyond the spin, what should investors do with it? For starters, it's a huge impact and a signal for the market that BP puts the problems of the marketplace around the world. Deepwater Horizon crash and the Gulf of Mexico oil spill behind Although it still pays $ 65 billion in cleanup costs and penalties resulting from the disaster.
Oil Giant BP bought the US shale assets from BHP Billiton for $ 10.5 billion during he first acquisition of large banknotes since 1999. (Photo: Omar M arques / SOPA Images / LightRocket via Getty Images)
Secondly, in terms of pure barrels equivalent oil, the acquisition will increase by 57% the company's oil and gas resources on land in the United States. That would be 190,000 barrels of oil equivalent per day (boepd) in additional production; 90,000 boepd of the Ford Eagle, 60,000 boepd of Haynesville and the last but not the least 40,000 boepd of the Permian.
The three games promise faster monetization of barrels compared to conventional offshore oil and gas games that take years. In addition, some parts of the Permian are often deemed profitable at $ 20 a barrel, according to research firm GlobalData. According to this argument, although the smallest is the boepd, for me, Permian acreage offers BP the biggest long-term increase.
Third, I think BP can do a good job on the shale area that has been a problem. BHP Billiton, because the buyer has a pedigree in the case while for the seller it was always an impulsive buy made up to the market foam with the oil prices in three digits.
Over the years, and in the openings that pre-date the 2015-2016 BP drop in oil prices, BP has launched a series of initiatives aimed at cost optimization and delivery of projects on time. When the collapse settled, the Dudley and BP management added another aspiration of a lower break-even point.
Last year, at the World Petroleum Congress in Istanbul, Turkey, Dudley told me that he felt the age of $ 100. aberration, and that BP would aim to reduce its breakeven point first to $ 50, then to the range of $ 35-40 and finally to $ 30 by 2021.
Since then, the The company has earned applause for its optimization, something that has also been picked up by rating agencies and industry analysis providers. This week, global research firm Rystad Energy estimated that BP had achieved "industry leader" lifting costs in 2017. With relatively stable and higher oil prices, this can only be achieved. improve.
in the city of London and Wall Street, but I am not one of them. The acquisition of large banknotes could be, but I do not think that BP has overpaid for assets. By the end of the day, more than 50 oil companies had expressed interest in buying BHP Billiton's assets, including serious Chevron interests, according to sources in Houston, United States. has described the US supply of shale assets as "a transformational acquisition" and "a world-class addition" to the company's portfolio. (Photo: Eric Piermont / AFP / Getty Images)
The operation is expected to be finalized by the end of October, and the oil giant will pay $ 5.25 billion in cash at the end of the transaction. He will also sell new shares to finance the rest. Subsequently, BP plans to buy the new stock "over time" by selling between $ 5 billion and $ 6 billion of assets.
According to the company, the first payment will result in a marginal increase in its debt ratio. However, this will remain "in BP's 20-30% target range, according to CFO Brian Gilvary, and should not be a concern."
And as a stock sweetener, BP said it would raise its dividend by 2.5% in the second quarter, the first such increase since 2014.
Overall, there is little to be disliked about this deal, especially the Permian component: a shale playing with the most inventory in the hands of a company making waves for its lower lifting costs.
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The oil giant BP buys for 10 $ 5 billion of American shale assets from mining company BHP Billiton The mining company has struggled to manage shale plays since it was bought for $ 20 billion in 2011. [19659001Commentingonthecompany'slargestacquisitionsince1999BPCEOBobDudleydescribesthisacquisitionas"atransformationalacquisition"and"aworldclassaddition"tothecompany'sportfolio
So, beyond the spin, what should investors do? For starters, it's a massive statement of impact and a signal on the market that BP is putting the troubles of the Deepwater Horizon crash and the Gulf of Mexico oil spill behind it, although He continues to pay the $ 65 billion bill in cleaning and penalty fees resulting from the disaster.
Oil Giant BP bought the US assets of BHP Billiton. (Photo: Omar Marques / SOPA Images / LightRocket via Getty Images)
Second, in terms of pure barrels of oil equivalent, the acquisition will increase US onshore oil and gas. resources of 57%. That would be 190,000 barrels of oil equivalent per day (boepd) in additional production; 90,000 boepd of the Ford Eagle, 60,000 boepd of Haynesville and the last but not the least 40,000 boepd of the Permian.
The three games promise faster monetization of barrels compared to conventional offshore oil and gas games that take years. In addition, some parts of the Permian are often deemed profitable at $ 20 a barrel, according to research firm GlobalData. According to this argument, although the smallest in terms of boepd, for me, Permian acreage offers BP the biggest long-term increase.
Third, I believe that BP can make a good punch on the area of shale that has been a problem. BHP Billiton, because the buyer has a pedigree in the case while for the seller it was always an impulsive buy made up to the market foam with the oil prices in three digits.
Over the years, and in the openings that pre-date the 2015-2016 BP drop in oil prices, BP has launched a series of initiatives aimed at cost optimization and delivery of projects on time. When the collapse settled, the Dudley and BP management added another aspiration of a lower break-even point.
Last year, at the World Petroleum Congress in Istanbul, Turkey, Dudley told me that he felt the age of $ 100. aberration, and that BP would aim to reduce its breakeven point first to $ 50, then to the range of $ 35-40 and finally to $ 30 by 2021.
Since then, the The company has earned applause for its optimization, something that has also been picked up by rating agencies and industry analysis providers. This week, global research firm Rystad Energy estimated that BP had achieved "industry leader" lifting costs in 2017. With relatively stable and higher oil prices, this can only be achieved. improve.
in the city of London and Wall Street, but I am not one of them. The acquisition of large banknotes could be, but I do not think that BP has overpaid for assets. By the end of the day, more than 50 oil companies had expressed interest in buying BHP Billiton's assets, including significant Chevron interests, according to sources in Houston, United States.
Bob Dudley described the American offer of shale assets as "a transformational acquisition" and "a world-class addition" to the company's portfolio. (Photo: Eric Piermont / AFP / Getty Images)
The operation is expected to be finalized by the end of October, and the oil giant will pay $ 5.25 billion in cash at the end of the transaction. He will also sell new shares to finance the rest. Subsequently, BP plans to buy the new stock "over time" by selling between $ 5 billion and $ 6 billion of assets.
According to the company, the first payment will result in a marginal increase in its debt ratio. However, this will remain "in BP's 20-30% target range, according to CFO Brian Gilvary, and should not be a concern."
And as a stock sweetener, BP said it would raise its dividend by 2.5% in the second quarter, the first such increase since 2014.
Overall, there is little to be disliked about this deal, especially the Permian component: a shale playing with the most inventory in the hands of a company making waves for its lower lifting costs.
