BHP Billiton Ltd., the world’s biggest mining company, agreed to buy Chesapeake Energy Corp.’s Fayetteville assets in central Arkansas for $4.75 billion in cash, entering the U.S. shale gas business.
BHP, also Australia’s largest oil and gas company, will add more than 10 trillion cubic feet of gas resources through the purchase, J. Michael Yeager, chief executive officer of BHP’s petroleum division, said in a statement from Chesapeake.
“It’s a bet on long-term U.S. gas prices going higher,” said Prasad Patkar, who helps manage about $1.8 billion, including mining stocks, at Platypus Asset Management Ltd. in Sydney. “They’ve entered a new business but have met the criteria that they have articulated for acquisitions, that is, tier-one, low-cost, long-life and expandable assets.”
Chief Executive Officer Marius Kloppers will expand BHP’s energy’s reserves by 45 percent with the purchase, the latest in a string of global oil and gas mergers and acquisitions. There have been 133 oil and gas deals done globally this year, worth $36.3 billion, according to data compiled by Bloomberg. Last year’s deals worth $285.3 billion were the second highest on record, behind 2007.
BHP rose as much as 3.3 percent to A$47.36 in Sydney trading, the most since Nov. 5, while the benchmark S&P/ASX 200 Index was little changed. BHP today also announced an off-market A$5 billion share buyback as part of its $10 billion program.
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