Natural gas prices in the U.S. have been pushed sharply lower in recent years because drillers have learned to unlock enormous amounts of natural gas from shale formations under several states, dramatically boosting supplies.
BHP Billiton also acquired Petrohawk Energy in 2011 for $12 billion. Petrohawk focused on oil instead of gas, though, so BHP did not have to write down those assets.
U.S. oil production is at its highest level since 1998, according to the Energy Department, but global oil prices have remained relatively high.
Analysts expect to see backlash from some shareholders who aren't interested in owning oil and gas assets.Evy Hambro, joint chief investment officer of BlackRock's natural resources equity team, criticized the deal during a conference call with Freeport-McMoRan executives. "I haven't heard anything on this call that in any way justifies why these companies should be put together," Hambro said. In afternoon trading, shares of Freeport-McMoRan fell $6.12, or 16 percent, to $32.16. Meanwhile, shares of Plains Exploration rose $8.45, or 23 percent, to $44.50, while McMoRan surged $7.36, or 87 percent, to $15.82. The acquisitions will require approval from shareholders at Plains Exploration and McMoRan but not from investors at Freeport-McMoRan because of the small number of shares being issued. ____ Shore reported from Denver.
Check Out Our Best Services for Investors
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Model portfolio
- Stocks trading below $10
- Intraday trade alerts