BHP Continues Shale Drive With Petrohawk Takeover

In spite of the steep premium BHP Billiton has paid for Petrohawk Energy, we have a positive view on the acquisition. Although gas prices are likely to stay low in the US over the short term, we expect prices to increase over the long term, making the deal a solid play on long-term US natural gas. Petrohawk has ample liquids-rich shale acreage, which will yield more valuable oil and condensate, where BHP can use its deep pockets to expand production relatively quickly.

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