UPDATE 2-BHP fetches $10.8 bln for U.S. shale assets as BP beefs up

* Sale price better than expected, investor, analysts say

* BP buys Petrohawk business for $10.5 bln

* BP says deal gives it some of best onshore U.S. acreage (Adds BP, investor, analyst comments)

July 27 (Reuters) - Global miner BHP Billiton has agreed to sell its U.S. shale oil and gas assets for $10.8 billion, mostly to BP Plc, and promised on Friday to hand back all the proceeds to shareholders.

The sale ends a disastrous seven-year investment in the shale business, which investors led by U.S. hedge fund Elliott Management have been pressing the company to jettison over the past 18 months. BHP put the business up for sale last August.

For BP, the purchase will allow it to rebalance its U.S. oil and gas business with oil production after focusing largely on natural gas assets, adding oil-rich wells in the Permian and Eagle Ford basins of Texas.

Investors and analysts said the sale price was better than expected and were pleased that BHP was sticking to its plan to return the sale proceeds to shareholders.

"It was the wrong environment to have bought the assets when they did but this is the right market to have sold them in," said Craig Evans, co-portfolio manager of the Tribeca Global Natural Resources Fund.

Royal Bank of Canada analysts said they had assumed BHP would get $8 billion in cash for the assets.

BHP first acquired shale assets in 2011 for more than $20 billion with the takeover of Petrohawk Energy and shale gas interests from Chesapeake Energy Corp, but suffered as gas prices collapsed, forcing it to book massive writedowns.

The world's biggest miner said it would record a further one-off charge of about $2.8 billion post-tax in its 2018 financial year results on the shale assets.

BP will acquire BHP's unit which holds the Eagle Ford, Haynesville and Permian assets for $10.5 billion, which the British oil major said would give it "some of the best acreage in some of the best basins in the onshore U.S."

BP beat rivals including Royal Dutch Shell and Chevron Corp for the assets.

"This is a transformational acquisition for our Lower 48 business, a major step in delivering our upstream strategy and a world-class addition to BP's distinctive portfolio," BP chief Executive Bob Dudley said in a statement.

Meanwhile, a unit of Merit Energy Company will buy BHP Billiton Petroleum (Arkansas) Inc and the Fayetteville assets, for $0.3 billion.

Tribeca's Evans said the clean exit for cash, rather than asset swaps which BHP had flagged were a possibility when it put the business up for sale, was a positive.

"It leaves the company good scope to focus on their far better offshore oil business," he said.

BHP Chief Executive Andrew Mackenzie said the company had delivered on its promise to get value for its shale assets.

"The sale of our onshore U.S. assets is consistent with our long-term plan to continue to simplify and strengthen our portfolio to generate shareholder value and returns for decades to come," Mackenzie said in a statement.

He said the company would confirm how and when it will return the net proceeds to shareholders when the deals are completed.

BP said it would pay the $10.5 billion in installments over six months from the date of completion, with $5.25 billion of the consideration to be raised through the sale of new shares.

Elliott had no immediate comment on the sale announcement.

(Reporting by Sonali Paul, additional reporting by Aditya Soni in Bengaluru; editing by James Dalgleish and Richard Pullin)