MOSCOW (MRC) -- The market hasn't exactly cheered BHP Group's proposed exit from its oil and gas business, with shares of both the mining giant and the acquirer, Woodside Petroleum, tumbling in the wake of deal, said Hydrocarbonprocessing.
A point of concern for investors is that BHP may have sold the assets too cheaply, and that getting only Woodside shares as payment is less than desirable. While there is likely some element of truth in this, investors may be missing the wider point of the deal, which will create a $29 billion oil and gas company after all.
It's likely that this deal signals that the era of paying premiums to acquire oil and gas assets is over. From now on, companies seeking to offload these type of assets will be forced to accept ever-diminishing prices. BHP's Sydney-listed shares dropped 8.4% in the two days after the deal was announced on Aug. 17 to close at AD47.70 (USD34.44) on Wednesday. Woodside slid 4.2% in the same time period to end at AD20.29.
The pullback continued in early trade on Thursday, with BHP again down, as much as 6.2%, and Woodside dropping as much as 2.6%. To be sure, there were other reasons for BHP's stock to retreat. For one, there's the ongoing slump in the spot price of iron ore, the commodity that generates the most revenue for the world's biggest mining company.
It's also possible that some investors may have sought to take profits after BHP on Tuesday reported its strongest earnings since 2012. But if some BHP stockholders are feeling hard done by, perhaps they should reflect on another asset the Melbourne-based miner is trying to sell.
BHP has had its Mount Arthur thermal coal mine in Australia's New South Wales state up for sale for more than a year. It still hasn't found a suitable buyer. At this stage it's like that BHP might even pay somebody to take the mine, the biggest in New South Wales, off its hands, given the company slashed the value of the asset on Wednesday from a value of about A$550 million to a liability of AD275 million (USD198 million), the Sydney Morning Herald reported.
Just seven months ago the Mount Arthur mine was valued at more than AD2 billion by BHP. The massive writedown in value has come despite the price of Australian thermal coal rising to the highest in 13 years. The Newcastle Weekly Index, the benchmark thermal coal price, has more than tripled since its 2020 low of USD46.37 a tonne, reaching USD168.71 in the week to Aug. 13, according to assessments by commodity price reporting agency Argus. While there are costs associated with rehabilitation that any buyer would have to bear, the fact that BHP can't seem to find a buyer for Mount Arthur in the best market for thermal coal since 2008 is telling.
As per MRC, BP acquired US shale assets from BHP Billiton for USD10.5 billion in the largest deal since the 1999 acquisition of Atlantic Richfield oil company. British oil and gas company BP bought US shale assets owned by mining company BHP Billiton.
Ethylene and propylene are the main feedstocks for the production of polyethylene (PE) and polypropylene (PP), respectively.
According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 1,176,860 tonnes in the first half of 2021, up by 5% year on year. Shipments of exclusively low density polyethylene (LDPE) decreased. At the same time, PP shipments to the Russian market were 727,160 tonnes in the first six months of 2021, up by 31% year on year. Supply of homopolymer PP and block-copolymers of propylene (PP block copolymers) increased. Supply of statistical copolymers of propylene (PP random copolymers) subsided.
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