The BHP Group Ltd (ASX: BHP) share price is pushing higher on Monday after the release of an announcement.
At the time of writing the mining giant’s shares are up 2% to $35.31.
What did BHP announce?
This morning the Big Australian provided the market with an update on its acquisition of an additional 28% working interest in Shenzi from Hess Corporation.
Shenzi is a six-lease development in the deepwater Gulf of Mexico. Prior to today, BHP owned a 44% interest, Hess Corporation held a 28% interest, and Repsol SA owned the remaining 28% interest.
But for the sum of US$505 million, BHP has now successfully taken its interest in the development to 72%.
Last month, BHP’s President of Petroleum Operations, Geraldine Slattery, explained the rationale of the deal, noting that it is consistent with its strategy of targeting counter-cyclical acquisitions in high-quality producing or near producing assets.
She 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,” Slattery added.
What now?
With this transaction bringing BHP’s working interest to 72%, it adds approximately 11,000 barrels of oil equivalent per day of production (90% oil) as of the transaction closing date of 6 November 2020.
In light of this, BHP’s total petroleum production guidance for the 2021 financial year of between 95 and 102 MMboe will be updated at its second quarter operational review in January.
This update will reflect the additional production from Shenzi and other operational updates such as Gulf of Mexico hurricane impacts.
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