Mining giant BHP Billiton (NYSE:BHP) is looking to unload its U.S. shale assets due to pressure from an activist investor who has argued that they don't fit within the company's portfolio. BHP currently is exploring several options for the oil and gas properties, including splitting them up into different packages or unloading them in one transaction.

While the company is early in the sales process, it has reportedly received several multibillion-dollar bids from big-oil giants including BP (NYSE:BP), Royal Dutch Shell (NYSE:RDS-A)(NYSE:RDS-B), and Chevron (NYSE:CVX). Given the size of the portfolio and the bidders, the sales process could have an impact on the oil patch going forward.

A bold bet on shale that hasn't panned out

BHP Billiton built its shale portfolio in 2011 during what was a boom period for shale gas drilling. The company's shale buying binge began with the purchase of Chesapeake Energy's Fayetteville Shale assets and an associated pipeline system for $4.75 billion in February of that year.

The mining giant followed up that deal a few months later with the acquisition of Petrohawk Energy. BHP Billiton paid $15.1 billion for the company, including the assumption of debt, to gain access to positions in the Eagle Ford and Haynesville shale plays, as well as the Permian Basin. Overall, BHP Billiton paid roughly $20 billion to buy nearly 1.5 million acres across some of the top shale regions in the U.S. at the time.

Two oil barrels on top of U.S. currency.

Image source: Getty Images.

Since then, the price of oil and natural gas has fallen significantly, taking the value of these properties with it. As a result, BHP wrote down the value of its shale assets by $2.8 billion in 2012 and another $2.8 billion in 2015 before slashing it by a whopping $7.2 billion in early 2016. While oil and gas prices have recovered a bit over the past year, BHP Billiton won't get back anything in a sale close to what it initially paid for these assets.

Big oil is among the leading bidders

This is why BHP Billiton currently is marketing its shale position as seven separate packages across three formations -- in hopes of maximizing their value -- though the company would be interested in selling the entire business to one buyer for the right price. BHP values its shale unit at $14 billion, though analysts only think it's worth $9 billion. Would-be buyers seem to agree with that lower valuation, given the initial bids the company received for the business.

According to a report by Bloomberg, BP, Royal Dutch Shell, and Chevron made bids for the entire business, valuing it between $7 billion and $9 billion. While BP made its offer alone, Chevron and Royal Dutch Shell partnered with private equity funds on their proposals. Meanwhile, several other energy companies and private equity funds have made separate bids for individual asset packages.

The presence of big oil buyers is worth noting since it adds some serious competition with strong balance sheets and industry experience. While "they won't pay too much," according to one analyst quoted by Bloomberg, "they won't pay too little" either "because they want the assets," which include the highly prized Permian Basin.

BP held assets in that fast-growing region until 2010 when the company sold its position to help pay for the oil spill in the Gulf of Mexico. It's been seeking an opportunity to get back into the area in recent years but has yet to find a deal that would bolster earnings due to red-hot land values. Meanwhile, both Chevron and Shell see that region as an important growth driver in the coming years and could, therefore, bolster their prospects by acquiring BHP's position.

In addition to seeking buyers for its shale assets, BHP Billiton also is looking at several other alternatives to maximize the value of this unit. These options include completing an IPO or spinoff of the business or swapping shale assets for additional resources in the Gulf of Mexico. The overarching goal of this process is to extract as much value for the assets as possible.

The waiting game

Given the size and complexity of the sales process, BHP doesn't expect to announce any asset sales until the end of this year or early 2019. That time frame could slow down merger and acquisition activity in the oil patch since bidders are unlikely to be interested in other deals until they know the outcome of this sale. However, once there's clarity on what BHP will do with its assets, it could cause the losing bidders to turn their attention elsewhere, which might fuel a wave of merger activity in 2019.

Matthew DiLallo owns shares of BHP Billiton. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.