BP agreed to buy US shale oil and gas assets from BHP Billiton for $10.5 billion, improving the British oil major’s impact in oil-rich onshore basins in its biggest deal in almost two decades.
BHP Billiton is a big turning point for BP since the Deepwater Horizon disaster in the Gulf of Mexico in 2010, for which the company is pays more than $65 billion in penalties and clean-up costs, Reuters reported.
This sale will increase BP’s quarterly dividend for the first time in four years, the company said, announcing a $6 billion share buyback as well.
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The sale puts an end to disastrous seven years by BHP, during which the company blew up $19 billion of shareholders’ funds. The deal also increases BP’s onshore oil and gas resources by 57%.
According to BP, the sale will enhance its earnings and cash flow per share, making it able to maintain its gearing within a 20-30% range. The company also said the deal will improve its quarterly dividend by 2.5% to 10.25 cents a share, the first rise in 15 quarters.
The $10.5 billion will be paid in installments over six months from the date of completion, with $5.25 billion of the consideration to be raised through the sale of new shares.
