BHP Billiton Limited
) has entered into an agreement with PetroChina International
Investment (Australia) Pty Ltd, whereby the latter will purchase
a stake in Browse Joint Venture, located offshore Western
Australia, from BHP. The gas project is still in its proposal
state. The sale includes an 8.33 percent stake in the East Browse
Joint Venture along with a 20 percent stake in West Browse Joint
The agreement value is approximated at US$1.63 billion,
payable in cash. It is expected that the sale will close in the
first half of calendar year 2013, subject to certain regulatory
approvals and other customary closing conditions.
The Browse Joint Venture is an initiative by the Woodside
Petroleum Limited to uplift the economic and social development
in the Kimberley region. The other participants in the project
include Woodside Energy Ltd., Shell Developments Australia Pty
Ltd., BP Developments Australia and Japan Australia LNG (MIMI
Browse) Pty Ltd.
PetroChina is the largest oil producer in Asia and this
purchase forms a critical part of the company's plans to outpace
its Chinese counterparts to acquire assets internationally, in
the wake of increased Chinese demand for imported oil and
BHP Billiton Chief Executive, Petroleum, J Michael Yeager
describes the agreement as a win-win situation for both the
parties, as PetroChina will own a share in an excellent gas
resource and BHP will be able to focus more on its core business,
exiting a non-strategic asset. However, the other partners in the
joint venture have an option to acquire BHP's share in the
project by matching the offer available.
BHP is one of the world's largest diversified resource
companies with operations spanning several continents. It has
interests in mineral exploration, production and processing, oil
and gas exploration and development, and steel production and
We currently maintain a Neutral recommendation on the stock.
The stock also bears a Zacks #4 Rank, which implies a short-term
(1-3 months) Sell rating. The company competes against industry
Rio Tinto Plc
), both holding a Zacks #3 Rank, implying a Hold rating.
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