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BP Turns Out to be Leading Bidder for BHP’s U.S. Assets


BP plc BP has emerged as the highest bidder to acquire BHP Billiton Limited’s BHP shale assets, in a bid to expand in the productive and highly profitable Permian Basin.

The U.S. onshore oil and gas assets to be sold comprise about 800,000 net acres in four shale basins, including the Permian Basin. Other bidders for the Melbourne-based, Australian mining conglomerate’s assets included a group of Royal Dutch Shell plc RDS.A and The Blackstone Group L.P. (BX), a consortium of Chevron Corporation (CVX) and Warburg Pincus, as well as Apollo Global Management, LLC (APO).

Per the bids received, BHP’s U.S. unit has been valued at about $9 billion. Per Reuters, BP submitted the highest offer worth more than $10 billion. However, the exact terms and other details related to BP’s offer have not been revealed yet, and an agreement between the two parties is anticipated in the coming weeks. BHP is believed to have a preference for selling the assets in a single package.

It has been a year since BHP announced its plan to divest the U.S. unit, mainly under pressure from activist investor Elliott Management Corp., which had targeted the company’s venture into U.S. oil and gas exploration.

Several oil giants including Exxon Mobil Corporation XOM, Apache Corporation (APA), Pioneer Natural Resources Company (PXD) have significant exposure in the Permian Basin. However, BP lacked presence in this acreage for long. Recovery in oil prices would likely be a key driver of its revenues as well as aid in growth. In order to compete with other majors, BP is attempting to expand its footprint in the region.

Price Performance

In the past three months, BP’s shares have gained 10.3%, outperforming the industry’s growth of 6.7%.

Zacks Rank & Stocks to Consider

BP currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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