BP has acquired US shale assets in a deal that amounted to $10.5 billion (£8 billion). It comes as a move that will expand the international oil footprint of the United Kingdom in onshore basins.
In the largest deal that was recorded by the company in nearly two decades, BP has agreed to purchase a swathe of southern US shale gas and oil assets from BHP, a global miner.
The company said that it is planning to increase the dividend that it pays to its shareholders for the first time in four years and would buy back approximately $6 billion worth of shares.
The deal will be partially funded with new shares. It adds 190,000 b/d of oil equivalent to the production of BP and 4.6 billion boe discovered resources to the upstream operations of the company.
However, after the announcement in early morning trading today, the share price of BP dropped by more than two percent.
This kind of acquisition is a new evidence of the increasing interest in the US shale sector, which numerous suppliers have invested in as a relatively low-cost alternative to the conventional crude oil.
The BP group chief executive, Bob Dudley, said that the deal was a “transformational acquisition.”
He stated: “Given our confidence in BP’s future – further bolstered by additional earnings and cash flow from this deal – we are increasing the dividend, reflecting our long-standing commitment to growing distributions to shareholders.”
The company will acquire the BHP stock which includes a number of the richest oil fields that are located in North America. These are based in regions such as Louisiana, Arkansas, and Texas.
The analysts at London Capital Group said that the deal “marks the end of an era for BHP as it gives in to pressure from activist investors Elliott Advisors and sells the site, which it purchased at the height of the oil boom.”