BHP Says Aims to Complete U.S. Shale Exit Within Two Years

(Bloomberg) -- BHP Billiton Ltd. is aiming to complete its exit from the U.S. onshore oil and gas sector within two years after settling on asset sales ahead of alternatives such as an initial public offering.

“We’re determined to divest these businesses,” Chief Executive Officer Andrew Mackenzie said Thursday at an annual meeting in Melbourne. “We have concluded with our shareholders that the most effective way to do this is through trade sales.”

BHP’s contentious $20 billion purchase of the assets in 2011 has been a lightening rod for an activist investor campaign that’s been driven this year by New York-based Elliott Management Corp. Mackenzie said in August the world’s biggest miner was talking to potential buyers and hoped to complete some trade sales to divest the unit.

Boosted by a rally in oil prices, shale producers in the U.S. are forecast to increase free cash flow in coming quarters, marking a turning point for a sector that’s previously piled up losses. Shale is likely be dominant in global energy markets for at least the next decade, the International Energy Agency said this week.

BHP won’t consider reversing its decision to exit shale, Mackenzie said. The company could pocket as much as $10 billion from the sales, according to Macquarie Group Ltd.

A series of data rooms are being prepared for potential buyers, with the technical data expected to be collated shortly after Christmas and additional information to be available a few months later, Mackenzie said. Alternative plans that BHP had outlined previously, including a potential demerger, an IPO, or asset swaps, would now only be considered if trade sales couldn’t be completed, he said.

“We’re having lots of informal discussions with a wide universe of buyers, getting them ready,” Mackenzie said at the meeting. “‘We want to get to get this done within two years, and ideally in less than that.”

BHP declined 0.3 percent to close at A$27.27 in Sydney on Thursday, trimming its advance this year to 9 percent.

The Nickel West unit in Australia is potentially for a sale at the right time, Mackenzie told reporters later. A $43 million project will allow the unit begin production of nickel sulfate, a product needed for lithium-ion batteries, from about April 2019, the producer said in August.

“We have to invest enough to make sure it’s an attractive business, and one that still throws off cash while we have it, but no more than that,” he said.

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