BHP Billiton (BHP) agrees to buy Petrohawk Energy (HK) for $12.1B in cash, or $38.75/share. The...

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Stone Fox Capital Comments (4558)
 
wow! Gotta have export plans down the road.
14 Jul 2011, 10:28 PM Reply Like

Alan von Altendorf Comments (1583)
 
Big unearned payday for HK ... BHP looks incredibly foolish.
14 Jul 2011, 10:44 PM Reply Like

laogao Comments (88)
 
The insiders that sold earlier this year look incredibly foolish.
It's possible that BHP have made a mistake, but I'm guessing we'll all look back at this a year from now and marvel at their genius.
14 Jul 2011, 11:26 PM Reply Like

Stone Fox Capital Comments (4558)
 
If production increases as much as they expect and US can set up and export market, than yeah they might just make out on this deal. That big of a premium is just very hard to out grow though. In a way, the money BHP is throwing into this area could just further contribute to the glut. They might just be there own worst enemy.
14 Jul 2011, 11:35 PM Reply Like

bigbenorr Comments (477)
 
Taking the cue from XOM?
14 Jul 2011, 11:52 PM Reply Like

Alan von Altendorf Comments (1583)
 
Nominal "reserves replacement" at 6mcf=1bbl. Like printing $3 bills with a picture of Millard Fillmore on the front and Daffy Duck on the back. Reminiscent of the Aussie grab for US shopping centers and commercial property that went bust in 2008. globalinsolvency.com/h...
15 Jul 2011, 12:23 AM Reply Like

Jeep Comments (1771)
 
Who knows? Maybe HK has stumbled into something in the Eagle Ford that is better than is known publicly and has been confirmed by BHP's geologists. Stopped clocks being right two times a day and all that.

The authentic Millard Fillmore $3 bill (with the slogan "There's one born every minute!" under the picture), does sound more plausible, though.
15 Jul 2011, 11:47 AM Reply Like

Bill Costello Comments (1187)
 
I think it will go down as being a less dumb acquisition than many others. They didn't buy BR when nat gas was $12 and it is probably better than BHP's past two deals with CHK in the Fayetteville and buying GOM assets and now not being able to drill them (unfortunate timing not their fault). The EF acreage is the real deal though they might of overpaid (though you could say it looks cheap compared to MRO's foray though not apples to apples) and you never know what expertise the NA engineers could bring to the young emerging shale play in Australia. There might be some very good motives behind this deal or they could look dumb and have overpaid when we look back in 5 years. I think the jury is out on this one.
15 Jul 2011, 12:11 PM Reply Like

Alan von Altendorf Comments (1583)
 
Bill, I always read your comments respectfully, however I believe HK has the gassy north side of the Eagle Ford trend. The deal is priced at p/e 150 for undeveloped acreage and little or no export potential. The flurry of shale M&A is a dead duck now, unless Congress mandates gas-fired power plants and shuts down coal.

Re Australia, very little terrestrial shale to exploit. CBM in Queensland is blue sky compared to conventional Browse Basin. I disbelieve the argument about American small cap shale frac knowhow. Cutting edge multistage packers and proppants are supplied by service companies Halliburton and Schulmberger. Shale geology is dead simple. What's in greatest demand at present is tank trucks to haul water to and from frac sites. None of it makes any sense at $4 mfc.
15 Jul 2011, 04:42 PM Reply Like

Bill Costello Comments (1187)
 
I wouldn't disagree with you really. I think the price was steep and more than I thought HK was worth (one reason we didn't own it) but I always knew Floyd was a willing seller but didn't think it would happen this fast. I was just trying to think of logical reasons why you would pay the price they did. At the end of the day there might not be a good reason. I was thinking the Australian angle as in the past few days I had heard or read about large companies trying to develop shale resources in Australia. COP signed a deal there and in France as well. I do think with a three year look back this will not be the worst deal we have seen and not the best of course.
15 Jul 2011, 05:30 PM Reply Like

Alan von Altendorf Comments (1583)
 
Published a 24-page analysis today: BHP's $15 Billion Lotto Ticket
www.cwsx.org/BHP_Lotto...
28 Aug 2011, 01:39 PM Reply Like