Friday, July 15, 2011

So, Three Reasons Why BHP Was Able and Willing To Buy Petrohawk at a 65% Premium -- SeekingAlpha: Smart Move By BHP


July 20, 2011: What it means to Bakken investors that BHP bought Petrohawk (Part I of an article at

July 19, 2011: More on what it means to Bakken investors that BHP bought Petrohawk (Part II of an article at

Original Post

1. Weak American dollar -- American assets are on sale (BHP is an Australian company). [Michael Filloon agrees: see his SeekingAlpha story, July 18, 2011.]

2. Aussies, Chinese, Koreans see value in American energy assets.

3. Too many American investors must have fallen for the New York Times article on the natural gas scam being perpetrated on the American public. 
BHP Billiton Petroleum will acquire Petrohawk Energy Corp., Houston, for $12.1 billion, [a 65% premium] giving the Australian firm operated positions in the US Eagle Ford and Haynesville shale resource plays and the Permian basin. 
Petrohawk sounds like a natural gas play to me:
Petrohawk has a nonproved resource base of 32 tcf equivalent for a total risked resource base of 35 tcfe. It had 3.4 tcfe of proved reserves at the end of 2010.

Petrohawk’s assets span 1 million net acres in Texas and Louisiana. Estimated 2011 net production is 950 MMcfd of gas equivalent or 158,000 b/d of oil equivalent. [Conversion factor = 6,012.] The company reported $8.2 billion in assets at Mar. 31, 2011, and a $390 million profit before tax for the last calendar year.

BHP Billiton reported production in the 9 months ended Mar. 31, 2011, of 260,000 b/d of oil, condensate, and natural gas liquids and about 1 bcfd of natural gas. In the fiscal year ended June 30, 2009, it had 332 million bbl of liquids reserves and 2.3 tcf of gas reserves.
By the way, contributor thinks it was a smart move by BHP to buy Petrohawk and even references the New York Times shoddy reporting.

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