BHP Chief Says Petrohawk Deal Valued By Reserves, Not Stock

BHP Billiton Ltd's (BHP) US$12.1 billion bid for Petrohawk Energy Corp. (HK) should be valued against the gas and oil assets in the ground rather than the U.S. shale gas company's share price, the chief executive of BHP said Friday.

Exploration companies in the oil and gas space attract higher takeover multiples that established companies where "upside" is capped, Marius Kloppers said during a conference call.

BHP, which Kloppers said has been scouting for shale gas opportunities for the last 18 months to two years, earlier Friday said it has agreed to pay US$38.75 a share for Petrohawk, which operates three leading shale gas and oil operations in the U.S. The all-cash offer represents a 65% premium to the Houston-based company's closing share price Thursday.

Kloppers said he is confident BHP can add value to Petrohawk due to the cost at which the Anglo-Australian company can raise funding and the speed it can develop the assets. The offer price recognizes the value of Petrohawk's opportunities, and the deal is expected to be accretive to earnings per share in the first full year after completion, he said.

Kloppers said he doesn't believe there are any material regulatory barriers to the transaction in place.

-By Robb M. Stewart, Dow Jones Newswires; [phone]; [e-mail]