BHP Focused on Liquids Production in Black Hawk Region for Remainder of 2014

Eagle Ford Contributes to 71% Increase in Liquids Production Over Nine-Month Time Period

 

Petrohawk Eagle Ford Shale Map

Hawkville Seen Here Extends into Webb County | Click to Enlarge

BHP Billiton’s Eagle Ford production accelerated at the end of the first quarter of 2014. The company expects continued growth in U.S. onshore liquids production of approximately 75% for the year, with a priority focus on the Black Hawk region of the Eagle Ford in Karnes and Dewitt counties.

A the end of March 2014, BHP completed scheduled well remediation activities in its Hawkville acreage. That contributed in part to a 71% increase in liquids production for the company’s U.S. onshore production over a nine-month time period, ending March 2014. Across the company’s portfolio, liquids production increased 16% to ~210,958 boe/d or 77 MMboe/d over the same time frame.

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BHP – Petrohawk Deal Brings Australia to the Eagle Ford

Petrohawk’s Eagle Ford position is paying off in a big way.  The company has received a bid to be acquired by BHP Billiton for a 65% premium over the prior days stock price. Petrohawk’s leading position in the Eagle Ford is likely a primary driver behind the acquisition. The company is strategically positioned in two of the hottest areas of the Eagle Ford with its Black Hawk and Hawkville field positions. The company also has a sizeable oil position at the Red Hawk Field in the Eagle Ford Shale Oil window that has not provided the economic results needed to compete for capital with Petrohawks other assets. Expect the Red Hawk Field to get more attention now that the operator has much deeper pockets.

Overall, drilling rates across Petrohawks asset base will likely increase as BHP looks to accelerate value from its newly acquired assets.

That’s a hefty price but BHP needs the people and the assets. After several failed bids to consolidate in the mining industry, the company turned to investing in oil & gas exploration and production.

The Petrohawk acquisition follows BHP’s $4.75 billion acquisition of Chesapeake’s Fayetteville Shale assets. BHP only got the assets in the Chesapeake deal, so over the next year the company was tasked with building a large US E&P business. The Petrohawk acquisition gives them the human capital and just happens to be a company that was a leader in the Fayetteville Shale before divesting assets to focus in the Haynesville Shale and Eagle Ford Shale.

BHP gets Petrohawk with its three core positions which include 225,000 acres in the Haynesville Shale, 120,000 net acres in the Lower Bossier Shale, 332,000 acres in the Eagle Ford Shale, and 325,000 acres in the Midland/Delaware basins, which is prospective for the Avalon Shale, Bone Springs, and Wolfcampian formation.

Combined with the Chesapeake deal, BHP will become one of the top ten natural gas producers in the US. The company’s onshore US operations will include almost 1,500,000 net acres that produce over 1.3 Bcf per day. [Read more…]

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