According to a market release on Friday, mining heavyweight BHP Billiton (ASX: BHP) and micro-cap Cue Energy Resources (ASX: CUE) both announced that they have agreed to increase their interests in WA-389-P, which is an exploration permit located in the Carnarvon Basin, Western Australia.
Whilst the deals entered into by each company still rely upon regulatory approval, the companies wish to increase their stakes, recognising significant remaining hydrocarbon potential in the area. "The permit is already substantially covered by 3D seismic, which will underpin continuing exploration of the block." Cue Energy will increase its interest to 40%, and BHP will increase its stake to 60% and, as such, will assume operatorship.
The announcement breaks the recent trend whereby BHP and other miners such as Rio Tinto (ASX: RIO) have divested in non-core and underperforming assets. BHP recently sold a 15% stake in its Jimblebar mine, raising $1.5 billion in cash.
Prior to this deal, Cue held a 35% interest, BHP held a 40% interest and Woodside Petroleum (ASX: WPL), which was the operator, held a 25% stake.
Foolish takeaway
It should be noted that Cue Energy has a market capitalisation of only $84 million. Whilst substantial findings in the area could benefit Cue significantly, it is a relatively small investment for BHP.
The Australian Financial Review says "good quality Australian shares that have a long history of paying dividends are a real alternative to a term deposit." Get "3 Stocks for the Great Dividend Boom" in our special FREE report. Click here now to find out the names, stock symbols, and full research for our three favourite income ideas, all completely free!
More reading
- Days of "heady growth' over for miners
- Five stocks for a well-diversified portfolio
- Five healthy stocks for your portfolio
Motley Fool contributor Ryan Newman does not own shares in any of the companies mentioned in this article.
