Hess Corporation has signed an agreement to sell its 28% stake in the Shenzi Field located in the deep-water Gulf of Mexico to the field’s operator BHP Billiton for $505 million.

The deal will see BHP Billiton increase its stake in the oil and gas field from 44% to 72%. The only other stakeholder in the Shenzi Field following the exit of Hess is Spanish oil and gas company Repsol, which holds a 28% stake.

John Hess – CEO of Hess said: “Proceeds will be used to fund our world class investment opportunity in Guyana.

“This sale is aligned with our strategy to preserve cash and preserve the long term value of our assets in the current low oil price environment.”

The Shenzi Field platform in the US deep-water Gulf of Mexico. Photo courtesy of Hess Corporation.

The Shenzi oil and gas field, which is located 120 miles from Louisiana coast, has been in production since 2009. In the first eight months of this year, the deep-water oil and gas field produced an average of 11,000 net barrels of oil equivalent per day.

Through the deal, BHP Billiton will be immediately adding nearly 11,000 barrels of oil equivalent per day of production, of which 90% is oil.

According to the Australia-based resources company. the deal is in line with its strategy of pursuing counter-cyclical acquisitions across high-quality producing or near producing assets.

Geraldine Slattery – BHP Petroleum Operations President said: “This transaction aligns with our plans to enhance our petroleum portfolio by targeted acquisitions in high quality producing deepwater assets and the continued de-risking of our growth options.

“We are purchasing the stake in Shenzi at an attractive price, it’s a tier one asset with optionality, and key to BHP’s Gulf of Mexico heartland. As the operator, we have more opportunity to grow Shenzi high-margin barrels and value with an increased working interest.”

The deal is expected to close by the end of this year once the customary closing conditions are met.

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