BHP Billiton plans sale to trim down west Texas shale assets

LONDON/NEW YORK Tue Oct 22, 2013 11:22am EDT

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LONDON/NEW YORK Oct 22 (Reuters) - BHP Billiton, the world's largest mining company, plans to sell roughly half its acreage in the Permian Basin - a revived oil and gas region in Texas and New Mexico - as it focuses on its most lucrative assets there.

BHP, already a significant oil and gas player, moved heavily into U.S. shale in 2011, acquiring Fayetteville assets from U.S. energy group Chesapeake and months later later Petrohawk Energy, spending almost $17 billion - $20 billion, including debt - just before a major downturn in U.S. natural gas prices.

The mining giant, also faced with cooling prices for its key mined commodities, has since been trimming across its divisions to focus on its more profitable core operations. It confirmed on Tuesday it was selling down in the Permian Basin to concentrate on acreage there that "holds the most interest".

"The drilling program has now defined our primary area of focus in the basin and, while this program is at a relatively early stage, we see the potential to build a sizeable business," a BHP spokeswoman said.

"As we continue with our evaluation, we will concentrate our efforts on the acreage that holds the most immediate interest for us while divesting some other parts of our holdings."

According to a request for proposals from adviser Scotia Waterous and dated Oct. 16, BHP is selling 250,000 net acres in west Texas - 165,000 net acres in the Delaware Basin and the remainder in the Midland Basin.

That compares to BHP's total of 500,000 net acres in the broader Permian Basin, according to its latest annual report.

BHP declined to comment on how much of the acreage up for sale came from the 2011 Petrohawk acquisition, which gave BHP 325,000 net acres in the Permian, described at the time as primarily oil, highly scaleable and with "significant upside potential". The remaining acres were acquired separately.

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