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The move represents a big bet by BP on U.S. oil and gas
production at a time when energy prices are rebounding. It would
allow it to significantly rebalance its business with oil
production, after focusing largely on natural gas assets.
BP is the front-runner in the auction for the assets run by BHP,
and could reach a deal in coming weeks, the sources added,
cautioning that an agreement is not certain and it is possible
that negotiations could end unsuccessfully.
The exact terms and composition of BP's offer could not be
learned. The sources asked not to be identified because the
matter is confidential. BP and BHP did not immediately respond
to requests for comment.
BHP said in August it aimed to sell onshore shale assets in the
Eagle Ford, Permian, Haynesville and Fayetteville basins, which
it acquired at the height of the oil boom. It had come under
pressure from activist hedge fund Elliott Management Corp to do
so.
The acreage for sale includes holdings that BHP acquired in its
$12-billion takeover of Petrohawk Energy in 2011, which have
declined rapidly in value as the price of natural gas has fallen
from $4.50 at the time of the deal to a low of $1.60 last year.
In 2015, BP began operating its onshore U.S. business as a
separate entity to make it more competitive. Since then, BP has
expanded the business to include acreage in the Haynesville and
Bossier shale plays near the Texas–Louisiana border.
However, BP's expansion in U.S. shale fell behind many of it
peers. When others were building out their presence onshore,
BP's focus was on the aftermath of the Deepwater Horizon
oil-spill disaster in the Gulf of Mexico, which has forced it to
pay tens of billions of dollars in damages and restitution since
2010.
If completed, the acquisition of BHP's acreage would be
transformational for BP's unit, adding oil-rich wells in the
Permian and Eagle Ford basins of Texas.
Other oil majors that participated in the auction for the assets
include Royal Dutch Shell Plc <RDSa.L> and Chevron Corp <CVX.N>,
sources have said.
(This version of the story has been refiled to fix reference to
BHP in paragraph 5 to "BHP" instead of "HP.")
(Reporting by David French, Jessica Resnick-Ault and Greg
Roumeliotis in New York; Editing by Nick Zieminski)
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