BHP Billiton, Energen Team Up For Permian JV

To purchase 50% undivided WI in 3 wells in 4,829 net acres in Reeves County.

BHP Billiton, Melbourne, Australia, (NYSE: BHP) plans to buy a 50% interest in Permian Basin assets in Texas from Energen Corp., Birmingham, Ala., (NYSE: EGN) for $18 million, potentially leading to a larger joint venture in the region between the two companies.

BHP Billiton will purchase undivided interest in three existing wells in Reeves County. As a result of purchasing the wells, and subject to initiating horizontal completions of two wells, BHP Billiton will own 50% undivided interest in 4,829 net acres. BHP Billiton will carry Energen Resources in completion operations of the two wells. BHP Billiton also has the option to purchase a 50% undivided interest in 51,720 net acres in Reeves County on or before May 1, potentially raising its holdings to 50% of 56,549 net acres.

Energen chairman and chief executive James McManus says, “We have compiled an extensive acreage position in the Delaware basin over the last several years as we have focused on increasing our production and reserves of oil and natural gas liquids.”

“We are very pleased to now have the opportunity to work with an excellent industry partner in the exploration and development of multiple exciting trends west of the Pecos River on an accelerated basis. At the same time, we will continue to implement our existing 2012 capital drilling and development plans east of the river,” he added.

“Should BHP Billiton exercise its option to purchase, we would expect Energen Resources to recoup all of its investment in the acreage while still retaining a 50% interest,” McManus said.