BHP shareholders are set for a windfall after the global miner agreed to sell its onshore US oil and gas assets for $US10.8 billion ($A14.6 billion).
Shares in the global miner hit a near-four-year high on Friday following announcement of the agreement to sell the US shale oil holdings to British petroleum giant BP and US group Merit Energy for more than analysts had expected.
BHP shares ended the day up 76 cents, or 2.3 per cent, at $34.40, having ranged as high as $34.56 during the session.
A subsidiary of oil major BP will pay $US10.5 billion in cash for BHP’s Petrohawk Energy Corporation, while a Merit Energy Company unit will buy BHP Billiton Petroleum (Arkansas) Inc and BHP Billiton Petroleum (Fayetteville) LLC for $US300 million.
Chief executive Andrew Mackenzie expects the proceeds from the deals will be returned to shareholders.
“With net debt currently toward the lower end of our target range of US$10 billion to US$15 billion … we expect to return the net proceeds from the transactions to shareholders,” he said in a statement on Friday.
“We will confirm how, and when, at the time of completion of the transactions.”
BHP expects to record a one-off post-tax charge of about $US2.8 billion in its full-year results on account of the deals.
Under previous boss Marius Kloppers, BHP invested heavily in the oil industry in the US, paying $US20.6 billion on two acquisitions in 2011.
The price of oil was then at a peak of around $US120 a barrel, before it plunged, hitting around $US30 in 2016.
The mining giant’s new chief Andrew Mackenzie wrote down the US shale assets by $US7.2 billion ($10.3 billion) in 2016 and announced BHP would exit the oil investments.
“Oil and gas markets have been significantly weaker than the industry expected,” Mr Mackenzie said in 2016.
Crude prices have sustained consistent gains over the past year to now be around $US70, allowing BHP to sell after the worst of the price slump has passed.