BHP Billiton acquires Chesapeake Energy shale gas assets

Out biggest and one of the most important stocks in client portfolios, BHP Billiton, announced an acquisition last evening/middle of the night. Here it is ---> BHP Billiton Announces Acquisition Of Chesapeake Energy Corporation's Fayetteville USA, Shale Assets.

Awesome. Byron has been into shale gas lately. And no, he does not have a small holding in the Karoo, just before you ask. The reasons: "The acquisition is consistent with BHP Billiton's strategy of investing in large, long-life, low cost assets with significant volume growth from future development. It also supports our goal of diversification by geography, customer and product. BHP Billiton will become the operator of Chesapeake's operated interests in the field." Gas. Everyone is getting excited about gas, including GE. Just to give you an idea of size and scale, the price 4.75 billion USD is 34 billion Rand. That is around the size of Tiger Brands. Phew.

At the same time BHP Billiton fleshed out their buyback program. And this is good for South African shareholders. There are two programs, one, the on market buy back and two the off market buy back. The background is that qualifying Aussie shareholders give up around ten percent because this is a more tax efficient way of doing it.

Read through it: "BHP Billiton Limited will repurchase shares under the Off-Market Buy-Back at a discount of at least 10 per cent to the volume weighted average price of BHP Billiton Limited shares over the five trading days up to and including the closing date of the Off-Market Buy-Back ("Market Price"). Eligible shareholders of BHP Billiton Limited may tender some or all of their shares at discounts of between 10 per cent and 14 per cent inclusive (at 1 per cent intervals) to the Market Price or as a final price tender (which is simply an election to receive the final buy-back price)."

We won't and can't participate in these buybacks, as they take place in London and Sydney, so all this is academic. And earnings enhancing. I guess that is all that you need to know. I can appreciate that whilst South African investors would prefer a bigger dividend check, the truth is that dividends are taxed and in some cases heavily, in the other geographies that BHP Billiton are listed.