BHP to Exit U.S. Shale to Refocus on Higher-Returning Assets
Our fair value estimate is AUD 19 per share for no-moat BHP. Management will exit U.S. shale oil and gas, citing, in an about face, the lack of operational synergies with other assets. We agree the company paid too much to acquire its shale assets and returns on that high cost base are poor. Sale will crystalise a significant loss, but it could improve on our base case of operating the assets if BHP can extract a good price. The conventional petroleum assets will be retained, a modest diversific...
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