BHP Group BHP recently announced the signing of an agreement with Hess Corporation to acquire the latter’s 28% interest in Shenzi oil and gas field located in the Gulf of Mexico for $505 million. This move is in sync with the company’s plans to augment its petroleum portfolio through targeted acquisitions in high-quality deepwater assets and the continued de-risking of growth options.

Currently, Shenzi is structured as a joint ownership with BHP being the operator with a 44% interest, Hess holding 28% and Spain’s Repsol S.A. the remaining 28%. Following the completion of the deal, expected by the end of December, BHP Group’s stake will go up to 72% and add approximately 11,000 barrels of oil equivalent per day to production (90% oil).

The Shenzi facility is located approximately 120 miles (195 kilometres) off the Louisiana coastline and is installed in approximately 4,300 feet (1,300 metres) of water on Green Canyon Block 653, making it the second deepest tension leg platform (TLP) in the world. The overall field comprises four blocks: Green Canyon 609, 610, 653 and 654.

Notably, the Shenzi project accounted for 7% of the Petroleum Group’s revenues in fiscal 2020. With the completion of the current deal, this proportion will go up in the future. For fiscal 2020, BHP Group’s underlying attributable profit from continuing operations was $9.06 billion in fiscal 2020, down 4% from $9.47 billion in fiscal 2019 as gains from favorable exchange rate movements, improved productivity and lower unit costs were offset by reduced commodity prices and volumes.

Despite the volatility in oil prices this year, the company believes that the fundamentals of oil and advantaged gas will remain strong over the next decade and beyond. While demand will continue to rise, the industry is subject to a decline rates of at least 3%