The news has clearly perked up from down under: After failing to land several acquisitions, Australia's mining behemoth, BHP Billiton (NYSE: BHP) (ASX: BHP), has found an industry where it can get deals done.
BHP has announced that it would part with $12.1 billion in cash to acquire Petrohawk Energy (NYSE: HK), a leader in the active Haynesville shale and the first company to drill a successful well in the now-active Eagle Ford shale. Adding in Petrohawk's debt, BHP's total tab will come to $15.1 billion, based on its $38.75 per-share all-cash offer. That amounts to a whopping 65% premium over the Houston company's Thursday close.
The sizable deal -- topped only by ExxonMobil's (NYSE: XOM) year-ago $31 billion purchase of XTO Energy -- follows BHP's acquisition of Chesapeake Energy's (NYSE: CHK) assets in Arkansas' Fayetteville shale. In what I then termed "BHP's initial toehold into U.S. shale gas assets," the company agreed in February to shell out $4.75 billion for Chesapeake's nearly 500,000 Fayetteville acres, along with other assets, including 420 miles of pipeline.
I clearly didn't expect BHP's toehold to move up to waist-deep so quickly or at such a hefty price. However, CEO Marius Kloppers explained his willingness to pay a healthy premium for Petrohawk by predicting that his company can utilize its own moderate cost of capital to achieve less expensive and more rapid development of the American company's assets.
Kloppers' pair of likely back-to-back purchases in the U.S. shale world follows three non-energy swings and misses for the company. It first labored long and hard to acquire its fellow megaminer Rio Tinto (NYSE: RIO), only to be thwarted by tumbling commodities prices in late 2008. Its next efforts, involving a proposed iron ore joint venture with Rio Tinto and an acquisition run at Saskatchewan's PotashCorp (NYSE: POT) -- the world's biggest producer of a key ingredient used in fertilizers -- were both halted by regulatory intransigence.
So it's looking like 2011 will be the year of U.S. energy success for the world's biggest minerals miner. In addition to its shopping spree amid shale plays, in March BHP received the second deepwater permit issued by the Interior Department following the resumption of activity after last year's Gulf well blowout and oil spill.
The action in shale player acquisitions is likely just picking up. And while we can all dream up more than a dozen potential targets, I'm inclined to start with Brigham Exploration (Nasdaq: BEXP). The company has enjoyed substantial successes in the Williston Basin's hot Bakken formation. On that basis, it's likely to be attractive to larger operators on the prowl, especially those with a thirst for oil.
For now, a gander at BHP Billiton displays an inviting natural resources "twofer" -- the major domo in minerals mining and a progressively more active petroleum operator. That combo, it seems, is well worth the company's addition to your watchlist.
