BP goes big.

BP plc (BP) - Get Report  made one of its biggest investments in decades Friday with the $10.5 billion purchase of shale oil and gas assets from BHP Billiton (BHP) - Get Report that mark a major return to the U.S. market following the deadly Deepwater Horizon disaster off the coast of Houston eight years ago.

BP said the purchase, its biggest deal since buying Atlantic Richfield in 1999, will boost its U.S. oil and gas resources by 57% and allow entry into 470,000 net acres of licences that include positions in the liquids-rich Permian-Delaware basin as well as positions in the Eagle Ford and Haynesville basins that spead over east Texas and into Louisiana. BP also said it would increase its quarterly dividend by 2.5% to 10.25 cents a share and buyback around $6 billion in stock as part of its ongoing strategy to boost investor returns. 

"This is a transformational acquisition for our Lower 48 business, a major step in delivering our Upstream strategy and a world-class addition to BP's distinctive portfolio," said CEO Bob Dudley. "Given our confidence in BP's future - further bolstered by additional earnings and cash flow from this deal - we are increasing the dividend, reflecting our long-standing commitment to growing distributions to shareholders."

BP shares were marked 0.4% lower at 562.3 pence each in early London trading following details of the purchase, a move that trims the stock's year-to-date gain to around 7%. Shares are a key holding in Jim Cramer's Action Alerts PLUS member club.

However, while the deal represents a notable return to the U.S. following the Deepwater Horizon explosion, which killed 11 workers on the Transocean-owned oil rig, cost the London-based group $65 billion in fines and penalities and sparked the biggest environmental disaster in American history, it also marks the multi-billion dollar failure of BHP to transition into shale oil production.

BHP put its shale assets on the block in August last year after activist investor Elliott Management Corp. bought a 5% stake in the mining group and began agitating for a sale of all of BHP's oil assets, including operations in the Gulf of Mexico.

BHP has booked massive losses on its ill-fated foray into U.S. shale. The London and Australia-listed group paid about $20 billion for the assets just seven years ago and has spent almost as much developing the operations.

The shale operations were an expensive legacy for BHP, accounting for $900 million of its total oil capital expenditure of $1.6 billion over year to the end of June, despite delivering just one-third of its total oil production of 86 million barrels and 40% of its total 636 billion cubic feet of gas.

BHP shares were marked nearly 4% higher and changing hands at 1,738.4 pence each in the opening hour of London trading.