by Lance Turner
Posted 11/12/2012 01:20 pm
Updated 2 years ago
BHP Billiton Limited of Australia, which owns land in the Fayetteville Shale Play in central Arkansas, is going after more shale acreage in the United States and says rising natural gas prices are making its Arkansas assets look even better.
BHP, which bought into the Fayetteville Shale in 2011 with the purchase of Chesapeake Energy's assest there, had taken a $2.84 billion impairment against its Fayetteville holdings when natural gas prices slumped. Since then, BHP has focused on drilling in the the Eagle Ford and Permian Basin shale and oil plays in Texas.
But now, natural gas prices are making the Fayetteville Shale more attractive, though not quite enough to start up the wells, BJP's chief of petroleum, Mike Yeager, tells The Sydney Morning Herald:
Even the Fayetteville gas shale is looking rosier than a few months ago, when it was hit with the $US2.84 billion write-down.
The impairment was made after gas prices in the US slumped from above $4 per unit when BHP bought the asset, to below $2 per unit.
Gas prices have since rebounded to be above $3.30 this week, and Mr Yeager said that price was good enough for BHP to operate some gas wells profitably in Fayetteville.
However, the company is not yet willing to return rigs to the gas assets, preferring to focus on oil production in the Eagle Ford and Permian.
BHP is now looking to add to its shale acreage in the Permain, in negotiations to acquire blocks as big as 10,100 hectares in some cases.