BHP to raise stake in Gulf of Mexico Shenzi field, equity output by 11,000 boe/d

London — BHP has agreed an initial deal with Hess Corp. to buy an additional 28% in the Shenzi deepwater concession in the Gulf of Mexico, raising its upstream interest by 11,000 b/d of oil equivalent, the company said in a statement Oct. 6.

The company said 90% of the production is oil and that the purchase of the increased stake was part of its "strategy of targeting counter-cyclical acquisitions in high-quality producing or near producing assets."

Low oil prices globally are forcing a swathe of consolidation and deal-making as operators snap up low-cost assets or buy rivals.

BHP currently operates Shenzi with a 44% interest alongside Hess (28%) and Repsol (28%). When completed, the $505-million acquisition will bring BHP's total interest in Shenzi -- which includes six deepwater leases -- to 72%.

Located some 120 miles (195 km) off the Louisiana coastline, Shenzi came on stream in early 2009 with a nominal capacity of 100,000 b/d of oil and 50 MMcf/d of natural gas. Crude oil is transported via a 20-inch pipeline connecting to Ship Shoal 332 B, while natural gas is exported via the Cleopatra pipeline. At the time, it was BHP's second operated, standalone, deepwater facility in the Gulf of Mexico after the Neptune project.

The company has also flagged the potential to grow output from the area.

The effective date of the transaction is July 1, with an expected close by December. The company has also flagged the potential to grow output from the area.

"As the operator, we have more opportunity to grow Shenzi high-margin barrels and value with an increased working interest," the company said in the statement.

"We continue to believe that the fundamentals for oil and advantaged gas will be attractive for the next decade and likely beyond," it said.