Australia-based resources company BHP has wrapped up its previously announced sale of its Fayetteville onshore gas assets in the US to Merit Energy for $300m.


BHP has cut its iron ore production guidance for 2019 (Credit: BHP)

The Fayetteville onshore gas assets have been acquired by MMGJ Hugoton III, a wholly owned subsidiary of Merit Energy.

As part of the deal, the Merit Energy subsidiary has acquired 100% of BHP Billiton Petroleum (Arkansas) and 100% of the membership interests in BHP Billiton Petroleum (Fayetteville), which together held the onshore US gas assets of BHP in Fayetteville in north central Arkansas.

Production from the divested Fayetteville onshore gas assets is said to be around 258,000 net acres. In the 2018 financial year, the onshore gas assets had yielded 13.3 million barrels of oil equivalent (79.9 billion cubic feet of gas).

The sale of the onshore gas assets in Fayetteville is part of a larger divestiture program of BHP to exit from its US shale assets to maximize value and returns to shareholders.

In separate agreements made in July 2018, the Australian resources company agreed to divest its entire stakes in the Eagle Ford, Haynesville, Permian and Fayetteville onshore US oil and gas assets for a total of $10.5bn.

BP’s subsidiary BP American Production agreed to acquire 100% of BHP’s subsidiary Petrohawk Energy, which owns the Eagle Ford, Haynesville and Permian assets.

At the time of the agreement, BHP said that the sale of its onshore oil and gas assets in the US is in line with its long-term strategy to continue to simplify and consolidate its portfolio to create shareholder value and returns for years to come.

According to BHP, the Eagle Ford, Haynesville and Permian fields involved in the deal are made up of nearly 526,000 net acres of oil, gas and natural gas liquids production. The production from the assets is domestically sold in the US through connections to intrastate and interstate pipelines and outside the country via the export of processed condensate.

In the 2018 financial year, the onshore shale assets produced 58.8 million barrels of oil equivalent for the company.

BHP expects the $10.5bn transaction with BP to be closed in October 2018, should it receive customary regulatory approvals and satisfy preceding conditions.