BHP, the world's biggest miner, said it would take on all Chesapeake's interests in Fayetteville Shale USA, including the midstream pipeline system, and expected to fund the purchase with cash.

Fayetteville holds the second-largest position in one of the world's largest gas fields, with about 487,000 acres (200,000 hectares) producing more than 400 million cubic feet of gas per day and with a 40-year operating life, said BHP.

"This acquisition will increase BHP Billiton's net reserve and resource base by 45 percent," the miner said.

"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's first major acquisition since its $39 billion bid for Potash Corp was rebuffed by Canada and its iron ore tie-up with Rio Tinto collapsed, the Chesapeake assets will cement BHP's position as Australia's top energy firm.

It comes just days after chief Marius Kloppers singled out oil and gas as a lucrative market for purchases "where there may be opportunities going forward."

"This transaction marks BHP Billiton's entry into the US shale gas business," said BHP petroleum chief J. Michael Yeager.

"The operated position we are obtaining will immediately make BHP Billiton a major North American shale gas producer."

Depending on regulatory approval BHP said it expected to close the deal in the first half of 2011.

The miner also announced a Aus$5 billion ($5.01) off-market share buyback, the beginning of a $10 billion programme flagged in its half-year results earlier this month.

BHP's half-year profit surged 72 percent to $10.52 billion due to bullish demand from emerging markets. Its shares were 1.9 percent higher at Aus$46.72 in late afternoon trade.