Mr Kloppers' successor Andrew Mackenzie was pretty much to the point with investors as he announced the retreat from shale oil at the 2017 results briefing. Global growth was stagnating, renewable sources of energy were replacing fossil fuels and a massive oil glut, which is still yet to clear, was created.īy 2014 oil had dropped around 75 per cent from those heady and optimistic days just three years earlier.Īnd like on the way up, BHP followed oil's fortunes down. That would have been less of a problem if the flood of supply had hit a thirsty market. Marginal acreages were brought into production, drilling rigs were up and running as soon as they could be found and production soared. Technological advances in the controversial field of hydraulic fracturing, or fracking as it is commonly known, saw production costs tumble. The galloping price-rise fired up more production. What could possibly go wrong? The short answer is plenty and the valuations of both oil and BHP shrivelled very quickly.įebruary 2011 turned out to be the top of the market for both oil and BHP.
Pretty soon BHP had sunk around $50 billion into the fossilised forests buried in America's deep south. The two big "game-changing" assets were augmented with plenty of other purchases and spending.
"Importantly, our offer and the associated substantial premium represent a unique opportunity for Petrohawk shareholders and recognise the growth opportunities embedded in its portfolio immediately," Mr Kloppers said at the time. The then-chief executive of BHP, Marius Kloppers, seemed pretty happy he had paid top dollar for the PetroHawk assets. It had risen from its GFC lows of around $US40 a barrel, to be up around $US120 a barrel.īHP was on a similar trajectory near a record high of $45 a share.īHP's new growth engine was energy a fourth pillar to stand by - and even surpass - iron ore, coal and copper. This time, it was $19 billion, in a friendly takeover of Petrohawk and its 1 million acres of prime Permian Basin shale oil real estate stretching from Louisiana to Texas. It slapped $US4.75 billion ($6 billion) down on the table to buy the rights from Chesapeake Energy to around half-a-million acres of prospective shale gas reserves at Lafayette in Arkansas.