Australian energy conglomerate BHP is increasing its upstream hold in the deepwater Gulf of Mexico after buying out Hess Corp.’s 28% stake in the Shenzi development for $505 million. 

The transaction raises BHP’s interest in Shenzi, which it already operates with a 44% stake, by an estimated 11,000 boe/d. Repsol SA has the remaining 28% stake.

The purchase is part of a “strategy of targeting counter-cyclical acquisitions in high quality producing or near producing assets,” BHP management said. The company has long been one of the most active bidders for federal leases offshore.

The Hess acquisition, set to be completed by year’s end, includes six deepwater leases about 120 miles offshore Louisiana. Shenzi came online in early 2009 with nominal capacity of 50 MMcf/d...