The deal, BP’s biggest since it bought oil company Atlantic Richfield Co in 1999, will increase its U.S. onshore oil and gas resources by 57 percent.
BP will acquire BHP’s unit which holds the Eagle Ford, Haynesville and Permian assets for $10.5 billion, giving it “some of the best acreage in some of the best basins in the onshore U.S.,” the company said.
It beat rivals including Royal Dutch Shell and Chevron Corp for the assets, which have combined production of 190,000 barrels of oil equivalent per day (boe/d)and 4.6 billion barrels of oil equivalent resources.
BP said the transaction would boost its earnings and cash flow per share and it would still be able to maintain its gearing within a 20-30 percent range.
The company also said it would increase its quarterly dividend by 2.5 percent to 10.25 cents a share, the first rise in 15 quarters.
Meanwhile, a unit of Merit Energy Company will buy BHP Billiton Petroleum (Arkansas) Inc and the Fayetteville assets, for $0.3 billion.
Tribeca’s Evans welcomed the clean exit for cash, rather than asset swaps which BHP had flagged as a possibility.
“It leaves the company good scope to focus on their far better offshore oil business,” he said.
BHP Chief Executive Andrew Mackenzie said the company had delivered on its promise to get value for its shale assets, while the sale was consistent with a long-term plan to simplify and strengthen its portfolio.
BHP shares rose 2.3 percent after the announcement, outperforming the broader market and rival Rio Tinto.
BP said it would pay the $10.5 billion in installments over six months from the date of completion, with $5.25 billion of the consideration to be raised through the sale of new shares.
Elliott had no immediate comment on the sale announcement.