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February 22, 2011 7:25 PM

Four Firms Advise on BHP's $4.75B Shale Purchase

Posted by Tom Huddleston Jr.

UPDATE: 2/23/11, 10:40 a.m., In-house counsel for BHP has been added in the fourth paragraph.

After a pair of failed deals, Australian mining giant BHP Billiton may have finally reversed its streak.

The company announced today that it reached an agreement with Chesapeake Energy Corporation to purchase all of the oil producer's Fayetteville Shale interests in a cash deal worth $4.75 billion.

In November, BHP was forced to withdraw a $38.6 billion hostile offer for fertilizer company Potash Corporation of Saskatchewan due to objections from the company and the Canadian government. In October, BHP failed to get antitrust clearance for a proposed joint venture with rival Rio Tinto.

BHP turned to Morgan, Lewis & Bockius for legal counsel on the Fayetteville acquisition. Houston-based partner David Asmus, who heads the firm's energy transactions practice, led the Morgan Lewis team with finance partner Michael King. Justin Stuhldreher, senior manager of BHP's legal group, served as the company's primary in-house counsel.

Meanwhile, Chesapeake again employed a legal team that included outside counsel C. Ray Lees, M&A partner at Oklahoma City-based Commercial Law Group P.C., as well as Wachtell, Lipton, Rosen & Katz and Wilmer Cutler Pickering Hale and Dorr. Wachtell corporate partner David Katz led his firm's team advising on the sale, while Washington, D.C.-based regulatory partners Reginald Brown and Benjamin Powell handled the work for Wilmer. Chesapeake's general counsel is Henry Hood.

Chesapeake also used that legal lineup in October, when the Oklahoma City-based company sold a third of its oil and gas assets in the Eagle Ford shale project in South Texas to the China National Offshore Oil Corporation for $1.08 billion. Chesapeake's recent sales are part of the company's efforts, announced this month, to sell off properties in order to raise $5 billion and to pay debt.

Today's agreement would include a midstream pipeline system, installed among the 500,000 acres of natural gas producing Fayetteville Shale properties located in Arkansas. The assets produce more than 400 million cubic feet of gas every day.

The deal, which is expected to close in the first half of 2011, would give BHP a solid entry into the American shale gas market and increase the company's net reserve and resource base by 45 percent, the company said.

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