Oil and gas company Hess Corporation has entered into an agreement to sell its 28 per cent working interest in the Shenzi field in the deepwater Gulf of Mexico to BHP to fund a project in Guyana.
Hess said on Monday it is selling its stake to BHP, the field’s operator, for a total consideration of $505 million.
Currently, Shenzi is structured as a joint ownership between BHP (operator, 44 per cent interest), Hess (28 per cent interest), and Repsol (28 per cent interest).
The sale is subject to customary adjustments and it has an effective date of 1 July 2020.
The acquisition would bring BHP’s working interest to 72 per cent and immediately add approximately 11,000 barrels of oil equivalent per day of production (90 per cent oil).
The field produced an average of 11,000 net barrels of oil equivalent per day in the first eight months of 2020.
“Proceeds will be used to fund our world-class investment opportunity in Guyana”, CEO John Hess said.
Hess has a working interest in the ExxonMobil-operated Stabroek block located offshore Guyana where ExxonMobil has recently sanctioned the third development.
Hess added: “This sale is aligned with our strategy to preserve cash and preserve the long term value of our assets in the current low oil price environment“.
The transaction is expected to close before year-end 2020 and is subject to customary closing conditions.
In a separate statement on Tuesday, BHP said this transaction is consistent with its strategy of targeting counter-cyclical acquisitions in high-quality producing or near producing assets.
BHP President Petroleum Operations, Geraldine Slattery, said: “This transaction aligns with our plans to enhance our petroleum portfolio by targeted acquisitions in high quality producing deepwater assets and the continued de-risking of our growth options.
“We are purchasing the stake in Shenzi at an attractive price, it’s a tier-one asset with optionality, and key to BHP’s Gulf of Mexico heartland.
“As the operator, we have more opportunity to grow Shenzi high-margin barrels and value with an increased working interest”.