BHP Billiton Limited (ASX:BHP) shares push higher on U.S. onshore assets sale

In morning trade the BHP Billiton Limited (ASX: BHP) share price has pushed higher after releasing an update on its U.S. onshore assets.

At the time of writing the mining giant’s shares are up 2.5% to $34.46, putting them within a whisker of their 52-week high.

What was in the update?

According to today’s release, BHP has entered into agreements for the sale of its entire interests in the Eagle Ford, Haynesville, Permian, and Fayetteville Onshore US oil and gas assets for a total base consideration of US$10.8 billion (A$14.6 billion) in cash.

Fellow energy giant BP has agreed to acquire the Eagle Ford, Haynesville and Permian assets for a consideration of US$10.5 billion, less customary completion adjustments.

One-half of the consideration is payable at completion, with the remaining deferred consideration being payable in six equal instalments over a six-month period. Management has advised that the payment of the deferred consideration is not subject to any conditions.

Merit Energy Company’s MMGJ Hugoton III business has agreed to acquire the Fayetteville assets, for a total consideration of US$0.3 billion (A$0.4 billion) less customary completion adjustments.

Both sales are subject to the satisfaction of customary regulatory approvals and conditions precedent and are expected to complete by the end of October 2018. Though the effective date at which the right to economic profits would transfer to the purchasers is July 1 2018.

What’s next?

According to BHP’s CEO Andrew Mackenzie, these funds could find their way back to shareholders.

He stated that: “With net debt currently toward the lower end of our target range of US$10 to US$15 billion, and consistent with our Capital Allocation Framework, we expect to return the net proceeds from the transactions to shareholders. We will confirm how, and when, at the time of completion of the transactions.”

This could mean shareholders of both BHP and Rio Tinto Limited (ASX: RIO) are destined for a bumper pay check in the next 12 months.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Telstra Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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