BHP to Buy Hess' Shenzi Field Stake for $505 Million


October 6, 2020
Credit: Hess

Credit: Hess

U.S. oil company Hess has agreed to sell its 28 percent interest in the Shenzi field in the deepwater U.S. Gulf of Mexico to BHP for $505 million, and use the cash for Guyana operations.

Shenzi, a six-lease development in the U.S. Gulf. is currently operated by BHP with a 44 percent stake. Hess owns 28 percent, and Repsol owns 28 percent.

The acquisition will bring BHP's interest to 72 percent and will add around 11,000 barrels of oil equivalent per day of production, of which  90 percent is oil.

John Hess, CEO of Hess, said the proceeds of the sale would be used to "fund our world-class investment opportunity in Guyana."

He said the sale was aligned with Hess' strategy to preserve cash "and preserve the long-term value of our assets in the current low oil price environment." To remind, Hess, with operator Exxon, last week sanctioned the Payara development in Guyana. 

BHP President Petroleum Operations, Geraldine Slattery said: "This transaction aligns with our plans to enhance our petroleum portfolio by targeted acquisitions in high quality producing deepwater assets and the continued de-risking of our growth options. We are purchasing the stake in Shenzi at an attractive price, it's a tier-one asset with optionality, and key to BHP's Gulf of Mexico heartland. As the operator, we have more opportunity to grow Shenzi high-margin barrels and value with an increased working interest."

BHP said while that its "strict" capital allocation framework tests ensure all investments are resilient to low points in the commodity cycle, " we also recognize the potential for price upside over the medium term given the global slowdown in development activity, and we are well-positioned to participate in that upside."

"We continue to believe that the fundamentals for oil and advantaged gas will be attractive for the next decade and likely beyond," BHP said.

The transaction is expected to close before year-end 2020 and is subject to customary closing conditions.

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