BHP Billiton Readies U.S. Shale Assets for Suitors
January 17 2018 - 8:14PM
Dow Jones News
By Robb M. Stewart
MELBOURNE, Australia--BHP Billiton Ltd. (BHP.AU) is preparing to
invite prospective buyers to go over the books for its U.S. onshore
oil-and-gas assets, but hasn't abandoned alternative exit routes
from its shale operations.
The resources firm said Thursday it was preparing appropriate
documents ahead of opening so-called data rooms for potential trade
buyers by the end of March, and in parallel continued to look at
possibly spinning off or separately listing the business.
Turning away from ambitions to make shale a core part of a
broader resources portfolio, BHP in August said it would sell
onshore U.S. operations that include more than 838,000 acres in
shale-rich U.S. regions. The decision followed months of
campaigning by Elliott Management Corp., a New York hedge fund that
has questioned the fit between BHP's petroleum business and its
mining of iron ore, copper and other minerals.
After recently lifting the number of rigs on its U.S. onshore
acreage, BHP said it expected the number to fall as it looked to
maximize value in the exit process. It said it continued to push
ahead with a number of alternatives to divest the assets.
Chief Executive Andrew Mackenzie has said the company wouldn't
rush to exit shale, which he conceded the company mistimed its
entry into when it spent billions of dollars at the peak in natural
gas prices. The company is pivoting its focus to its conventional
oil-and-gas operations, including assets in the Gulf of Mexico and
in Australia, and Mr. Mackenzie has said the decision to leave
shale wasn't driven by Elliott's campaign.
BHP's petroleum volumes declined 7% year-over-year to 99 million
barrels of oil equivalent in the six months through December as its
U.S. operations were hit by Hurricane Harvey and Hurricane Nate, in
what was a mixed quarter across the company, with copper output
rebounding, iron-ore production steady and steel-making
metallurgical coal slipping on-year.
Planned capital expenditure on petroleum has been scaled back to
US$1.9 billion this financial year, from a previous target of US$2
billion, with onshore U.S. spending set to be lower at US$1.1
billion, BHP said. The company had nine rigs working onshore in the
U.S. in the last quarter, but said it expected to remove rigs from
the Eagle Ford and Haynesville fields over the coming months.
The British-Australian company continues to target oil-and-gas
production of 180 million to 190 million barrels in fiscal 2018,
and also has maintained guidance for copper, iron ore and thermal
coal. It scaled back guidance for metallurgical coal production for
the year to between 41 million and 43 million metric tons, from an
earlier 44 million-46 million tons, due to problems at two coal
mines in Australia's eastern Queensland state.
Mr. Mackenzie said momentum across BHP's wider portfolio was
expected to deliver a stronger second-half operating performance,
with overall volume growth of 6% for the full year. That marks a
pullback on expected 7% growth the company had been
forecasting.
Write to Robb M. Stewart at robb.stewart@wsj.com
(END) Dow Jones Newswires
January 17, 2018 19:59 ET (00:59 GMT)
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