logo-loader

Petrohawk Energy’s $12 billion takeover lights up shale gas sector

Published: 16:36 15 Jul 2011 BST

no_picture_pai

Shale gas companies moved sharply higher this morning in response to news that peer Petrohawk Energy (NYSE:HK) will be acquired by diversified mining and energy giant BHP Billiton (NYSE:BHP).

BHP Billiton is paying US$38.75 per share by means of an all-cash tender offer, representing a total equity value of around US$12.1 billion - and a total enterprise value of around US$15.1 billion, including the assumption of net debt.

BHP’s decision to move deeper into the shale oil and gas industry comes after recently aborting its takeover bid for Potash Corp (NYSE:POT), which ran into major political hurdles by the Canadian government. The transaction would provide BHP with operated positions in the three world class resource plays of the Eagle Ford and Haynesville shales, and the Permian Basin.

Petrohawk’s assets cover approximately 1,000,000 net acres in Texas and Louisiana, with estimated 2011 net production of approximately 950 million cubic feet equivalent per day (MMcfe/d), or 158 thousand barrels of oil equivalent per day (Mboe/d). At year-end 2010, Petrohawk reported proved reserves of 3.4 trillion cubic feet of natural gas equivalent (Tcfe). The company has a current non-proved resources base of 32 Tcfe for a total risked resource base of 35 Tcfe.

The US shale gas market has witnessed explosive growth in the past decade, transformed by new drilling techniques that can recovered previously considered unrecoverable oil and gas reserves from shale. This had lead to intense interest from the world’s major energy players and lead to a string of acquisitions across the United States, and more recently, Western Canada.  

Appetite for unconventional acreage in Australia and Eastern Europe, which are also considered prime areas for exploiting shale formations, has also heated up in the past couple of years; Australia thanks to its close proximity to Asian markets, and Eastern Europe for its extensive pipeline network connected to Western Europe – a net importer of natural gas.

Shares in several players in the shale gas sector soared today, as speculation intensified that other deals would be forthcoming. Cabot Oil & Gas (NYSE:COG) climbed nearly 8%, EOG Resources (NYSE:EOG) rose more than 4%, SM Energy (NYSE:SM) jumped 7.75%, Magnum Hunter Resources (NYSE:MHR) added nearly 6% while Chesapeake Energy (NYSE:CHK) rallied 7.3%.

Caledonia Mining tackles 2023 challenges with optimism for 2024 as it...

Caledonia Mining Corporation PLC (AIM:CMCL, NYSE-A:CMCL) chief executive Mark Learmonth tells Proactive's Stephen Gunnion the company faced a challenging 2023, primarily due to poor production in the first half of the year at its core asset, the Blanket Mine in Zimbabwe, and an underperformance...

2 hours, 7 minutes ago