PERTH (miningweekly.com) – Mining major BHP has completed the sale of its Eagle Ford, Haynesville and Permian onshore US oil and gas assets, for $10.5-billion and on Thursday announced that it would return $10.4-billion to shareholders.
BHP in July this year announced the sale of its onshore US oil and gas assets for a combined $10.5-billion, with BP American Production Company, a subsidiary of energy major British Petroleum (BP), acquiring all the issued share capital of Petrohawk Energy Corporation, which holds the Eagle Ford, Haynesville and Permian assets.
Merit Energy Company acquired BHP’s interest in the BHP Billiton Petroleum (Arkansas) and its membership interest in BHP Billiton Petroleum (Fayettteville), which holds the Fayetteville assets.
The Merit transaction was completed at the start of October.
BHP said on Thursday BP had paid one-half of the gross consideration, with the balance payable in six equal installments over a six-month period. The first installment is due one month after the transaction has been completed.
The net proceeds from the sale of the company’s Onshore US assets are expected to be $10.4-billion, with the diversified giant saying that these proceeds would be returned to shareholders.
The shareholder return programme would start immediately, with BHP targeting an off-market buy-back of $5.2-billion of BHP shares, under which the company could buy shares back at a discount of up to 14%.
The balance of the proceeds from the onshore US asset sale would be paid in the form of a special dividend, which would be determined following the completion of the off-market buy-back, and which would be payable in January.
BHP gained nearly 3% on the ASX on Thursday.
“Consistent with our capital allocation framework, the board has carefully considered how best to return the net proceeds to our shareholders,” said BHP chairperson Ken MacKenzie.
“We believe that the off-market buy-back and special dividend programme will return significant value to all our shareholders, allowing the entire BHP global shareholder base to participate, both directly and indirectly, in the shareholder return programme.”
Meanwhile, Moody’s has upgraded BHP’s long-term rating from A3 to A2, and its short-term commercial paper ratings from P2 to P1.