UPDATE 2-BHP Billiton makes $4.75 bln move into shale gas
Global mining giant BHP Billiton has agreed to buy shale gas interests from Chesapeake Energy Corp for $4.75 billion in its first move into shale gas as it looks to beef up its oil and gas business. In BHP's first big acquisition since a string of failed deals, the global miner said it was buying Chesapeake's holdings in Arkansas' Fayetteville shale natural gas field. "BHP have had four multi-billion deals which have tipped over so the market should be pleased that this is one that is going to go through and it is a change of direction in terms of looking at their petroleum division," said Ric Ronge, portfolio manager at Pengana Capital. BHP shares jumped more supra store than 3 percent in early Sydney trade on news of the deal, which the company will fund from its substantial cash reserves. BHP's acquisitions strategy has shifted focus to its petroleum division after regulatory and political obstacles dashed its $39 billion takeover bid for fertilizer maker Potash Corp and an iron ore joint venture with Rio Tinto . Chesapeake's Fayetteville shale assets include about 487,000 acres of leasehold and producing natural gas properties in Arkansas in the U.S., one of the world's largest gas fields. Chesapeake said the deal with BHP Billiton Petroleum included existing net production of about 415 million cubic feet of natural gas equivalent per day and midstream assets with about 420 miles of pipeline. "We're delighted to inform you today of a very, very substantive piece of business that we feel is a huge and very, very positive addition to our petroleum company within BHP Billiton Corporation," BHP Petroleum chief Michael Yeager told reporters, adding the deal would be cash and earnings accretive from day one. BHP said it aimed to triple daily production from the new asset as the field was developed. The deal is expected to close in the first half of 2011. (Reporting by Michael Smith and Sonali Paul; Editing by Balazs Koranyi)