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How Will BP Gain From $10.5B US Onshore Acres Acquisition?
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BP Plc (BP - Free Report) recently announced an agreement to acquire premium onshore shale plays in the United Sates from BHP Billiton Limited (BHP - Free Report) . The transaction, valued at $10.5 billion, will be the largest acquisition made by the British energy giant since 1999.
Details of the Premium Shale Acres to Be Acquired
In the Permian Basin, BP will take over 83,000 acres of land, producing 40,000 barrels of oil equivalent per day. The to-be-acquired Permian acres are expected to have 3,400 drilling locations.
BP has also agreed to include 194,000 Eagle Ford acres, producing 90,000 barrels of oil equivalent per day. The total sites of drilling activities in Eagle Ford are estimated at 1,400.
BP also expects to acquire 194,000 acres in Haynesville basin with 720 drilling locations. The asset has been producing 60,000 barrels of oil equivalent every day.
In total, roughly 470,000 acres of land are to be acquired in the respective shale plays with total daily production of 190,000 barrels of oil equivalent. Out of the total oil equivalent, volumes production, almost 45% is liquid. Notably, BP expects total discovered reserves from all the respective resources to stand at 4.6 billion barrels of oil equivalent.
The world class deal reflects BP’s strong intention to restructure and enhance its activities in the onshore resources in the United Sates.
Free Cashflow to Skyrocket
Following the integration of the onshore U.S. shale acres, BP expects its projected free cashflow to surge $1 billion, taking the latest free cashflow target for 2021 to $14-$15 billion.
The acquisition will also lead to significant cost reductions that will likely be sustainable and create pre-tax synergies of more than $350 million every year.
Long-Awaited Dividend Hike
The giant acquisition is not expected to dilute BP’s financial strength and is in line with the company’s goal of maximizing shareholders’ value.
Over the last few quarters, the market has been expecting a quarterly dividend hike by BP on the back of strong and sustainable integrated energy businesses. Now, after 15 long quarters, the firm managed to raise its quarterly dividend by 2.5% to 10.25 cents per ordinary share.
About BP
BP has rallied 27.3% over the past year, outperforming the 17.5% collective gain of the stocks belonging to its industry.
The integrated energy company has been gaining on the back of a strong portfolio of upstream projects. Since 2016, BP has placed 15 key upstream projects online, including Atoll Phase 1 & Shah Deniz 2. Such developments are encouraging the British energy giant to boost production by 900 thousand barrel of oil equivalent per day (MBOE/D) by 2021.
Zacks Rank & Other Stocks to Consider
BP carries a Zacks Rank #2 (Buy). Other prospective players in the energy space include McDermott International, Inc. and Murphy Oil Corporation (MUR - Free Report) . While Murphy Oil has a Zacks Rank #2, McDermott sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
McDermott’s earnings beat the Zacks Consensus Estimate in three of the last four quarters, the average positive surprise being 73.6%.
Murphy Oil’s bottom line surpassed the consensus mark in each of the last four quarters, the average positive earnings surprise being 102.5%.
5 Medical Stocks to Buy Now
Zacks names 5 companies poised to ride a medical breakthrough that is targeting cures for leukemia, AIDS, muscular dystrophy, hemophilia, and other conditions.
New products in this field are already generating substantial revenue and even more wondrous treatments are in the pipeline. Early investors could realize exceptional profits.
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How Will BP Gain From $10.5B US Onshore Acres Acquisition?
BP Plc (BP - Free Report) recently announced an agreement to acquire premium onshore shale plays in the United Sates from BHP Billiton Limited (BHP - Free Report) . The transaction, valued at $10.5 billion, will be the largest acquisition made by the British energy giant since 1999.
Details of the Premium Shale Acres to Be Acquired
In the Permian Basin, BP will take over 83,000 acres of land, producing 40,000 barrels of oil equivalent per day. The to-be-acquired Permian acres are expected to have 3,400 drilling locations.
BP has also agreed to include 194,000 Eagle Ford acres, producing 90,000 barrels of oil equivalent per day. The total sites of drilling activities in Eagle Ford are estimated at 1,400.
BP also expects to acquire 194,000 acres in Haynesville basin with 720 drilling locations. The asset has been producing 60,000 barrels of oil equivalent every day.
In total, roughly 470,000 acres of land are to be acquired in the respective shale plays with total daily production of 190,000 barrels of oil equivalent. Out of the total oil equivalent, volumes production, almost 45% is liquid. Notably, BP expects total discovered reserves from all the respective resources to stand at 4.6 billion barrels of oil equivalent.
The world class deal reflects BP’s strong intention to restructure and enhance its activities in the onshore resources in the United Sates.
Free Cashflow to Skyrocket
Following the integration of the onshore U.S. shale acres, BP expects its projected free cashflow to surge $1 billion, taking the latest free cashflow target for 2021 to $14-$15 billion.
The acquisition will also lead to significant cost reductions that will likely be sustainable and create pre-tax synergies of more than $350 million every year.
Long-Awaited Dividend Hike
The giant acquisition is not expected to dilute BP’s financial strength and is in line with the company’s goal of maximizing shareholders’ value.
Over the last few quarters, the market has been expecting a quarterly dividend hike by BP on the back of strong and sustainable integrated energy businesses. Now, after 15 long quarters, the firm managed to raise its quarterly dividend by 2.5% to 10.25 cents per ordinary share.
About BP
BP has rallied 27.3% over the past year, outperforming the 17.5% collective gain of the stocks belonging to its industry.
The integrated energy company has been gaining on the back of a strong portfolio of upstream projects. Since 2016, BP has placed 15 key upstream projects online, including Atoll Phase 1 & Shah Deniz 2. Such developments are encouraging the British energy giant to boost production by 900 thousand barrel of oil equivalent per day (MBOE/D) by 2021.
Zacks Rank & Other Stocks to Consider
BP carries a Zacks Rank #2 (Buy). Other prospective players in the energy space include McDermott International, Inc. and Murphy Oil Corporation (MUR - Free Report) . While Murphy Oil has a Zacks Rank #2, McDermott sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
McDermott’s earnings beat the Zacks Consensus Estimate in three of the last four quarters, the average positive surprise being 73.6%.
Murphy Oil’s bottom line surpassed the consensus mark in each of the last four quarters, the average positive earnings surprise being 102.5%.
5 Medical Stocks to Buy Now
Zacks names 5 companies poised to ride a medical breakthrough that is targeting cures for leukemia, AIDS, muscular dystrophy, hemophilia, and other conditions.
New products in this field are already generating substantial revenue and even more wondrous treatments are in the pipeline. Early investors could realize exceptional profits.
Click here to see the 5 stocks >>