BHP bid for Petrohawk gives wings to shale companies

Stock Market Predictions

BANGALORE (Global Markets) - Shares of U.S. oil and gas producers that own shale acreages rose on Friday, following major global miner BHP Billiton's bid to buy Petrohawk Energy at a hefty premium.

BHP will buy Petrohawk for $12.1 billion, paying a premium of 65 percent to raise its presence in shale fields, which are underground rock formations rich in oil and gas.

Shares of Chesapeake Energy, Range Resources Corp, SM Energy Co, Southwestern Energy Co, Carrizo Oil & Gas and Ultra Petroleum rose in trading before the bell.

"Transactions of this size always seem to offer a bid to the group ...," Wells Fargo analyst Michael Hall said in a note. "As it relates to specific tickers, Range Resources stands out as a key beneficiary given that it is essentially a pure play shale company."

Shares of Petrohawk, the company that Hall calls "emblematic of the industry's shift toward shale gas development," already have risen more than 28 percent this year. The stock leaped 64 percent on Friday.

"We expect the exploration and production space to outperform in the coming days, with a focus on companies with high relative exposure in the Eagle Ford, and to a lesser extent the Haynesville," Oppenheimer analyst Fadel Gheit said.

He was referring to the shales that straddle parts of South and East Texas, along with Louisiana.

(Reporting by Krishna N Das in Bangalore; Editing by Maju Samuel)