Hess sells Shenzi stake to BHP in US$505m deal

US-based independent Hess is selling its 28% working interest in the Shenzi field in US Gulf of Mexico to operator BHP.

Principal analyst Justin Rostant said: “The deal price of US$505 million reflects an asset value of US$1.8 billion, right in line with Wood Mackenzie’s asset value found in our Lens Upstream platform.  This indicates both parties received a fair deal. 

“This was a strategic move for both Hess and BHP. The sale allows Hess to generate a sizeable amount of cash needed to fund its capital-intensive projects in Guyana. For BHP, the deal was opportunistic and adds low-cost barrels to its US Gulf of Mexico portfolio.”  

He added: “Although Hess is selling 28% of its US Gulf of Mexico value, it is still showing interest the region. The independent is currently participating in the BP-operated Galapagos well targeting the Cretaceous, which if successful will be a new play-opener within the basin. 

“BHP’s US Gulf of Mexico production will increase by 16% to 71,000 barrels of oil equivalent per day after the deal closes. An increased stake in Shenzi indicates BHP’s confidence in its upcoming infill development projects and potential tieback of its 100%-owned Wildling discovery.”