Annexure 1: Independent Limited Assurance Report
P a g e 177 |
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Ernst & Young
11 Mounts Bay Road Perth WA 6000
Australia GPO Box M939 Perth WA 6843 |
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Tel: +61 8 9429 2222
Fax: +61 8 9429 2436
ey.com/au |
8 April 2022
The
Board of Directors
Woodside Petroleum Ltd
Mia
Yellagonga
11 Mount Street
Perth WA 6000
Australia
Dear Directors
PART 1 INDEPENDENT LIMITED ASSURANCE REPORT ON PRO FORMA HISTORICAL FINANCIAL INFORMATION
We have been engaged by Woodside Petroleum Ltd (Woodside) to report on the Merged Group pro forma historical financial information of Woodside and its
subsidiaries (including BHP Petroleum International Pty Ltd and its subsidiaries, presented on a post-Restructure basis and excludes the Restructure Entities (BHP Petroleum)) for inclusion in the Merger Explanatory Memorandum dated on or
about 8 April 2022 (Explanatory Memorandum) and issued by Woodside in respect of the acquisition of BHP Petroleum by a member of Woodside pursuant to the Share Sale Agreement between Woodside and BHP Group Ltd dated 22 November
2021 (the Transaction).
Expressions and terms defined in the Explanatory Memorandum have the same meaning in this report.
Pro Forma Historical Financial Information
You have
requested Ernst & Young to review the following pro forma historical financial information of Woodside and its subsidiaries (including BHP Petroleum) (hereafter, the Merged Group):
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The Merged Group pro forma historical income statement for the year ended 31 December 2021 as set out in Section 7.3 of the Explanatory Memorandum; |
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The Merged Group pro forma historical statement of financial position as at 31 December 2021 as set out in of Section 7.4 of the Explanatory Memorandum; and |
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The Merged Group pro forma historical statement of cash flows for the year ended 31 December 2021 as set out in Section 7.5 of the Explanatory Memorandum. |
(Hereafter the Merged Group Pro Forma Historical Financial Information).
A member firm of Ernst &
Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
The Merged Group Pro Forma Historical Financial Information for the year ended 31 December 2021 has been derived
from the:
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i) |
Woodside financial statements set out in the Woodside 2021 Annual Report; |
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ii) |
BHP Petroleum Historical Financial Information for the year ended 30 June 2021 as outlined in Appendix 12.3 adjusted
to exclude the financial performance and cashflows for the six months from 1 July 2020 to 31 December 2020 and include the financial performance and cash flows for the six months from 1 July 2021 to 31 December 2021 based on the
information in the BHP Petroleum Historical Financial Information for the six months ended 31 December 2021 and 31 December 2020 respectively; |
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iii) |
adjusted for the effects of pro forma adjustments described in described in Note (a) of Section 7.3 for the
Merged Group Pro Forma Historical Income Statements, Note (a) of Section 7.4 for the Merged Group Pro Forma Historical Statement of Financial Position and Note (a) of Section 7.5 for Merged Group Pro Forma Historical Cash Flows
respectively. |
The Merged Group Pro Forma Historical Financial Information has been prepared in accordance with the stated basis of preparation,
being the recognition and measurement principles contained in Australian Accounting Standards (AAS) other than that it includes adjustments which have been prepared in a manner consistent with AAS that reflect (i) the recognition of
certain items in periods different from the applicable period under AAS, (ii) the exclusion of certain transactions that occurred in the relevant periods, and ((iii) the impact of certain transactions as if they occurred as at 31 December
2021 for the pro forma historical statement of financial position and from 1 January 2021 for the pro forma historical income statement and cash flows.
Due to
its nature, the Merged Group Pro Forma Historical Financial Information does not represent the Merged Groups actual or prospective financial position, financial performance, and/or cash flows.
The Merged Group Pro Forma Historical Financial Information is presented in the Explanatory Memorandum in an abbreviated form, insofar as it does not include all of the
presentation and disclosures required by Australian Accounting Standards and other mandatory professional reporting requirements applicable to general purpose financial reports prepared in accordance with the
Corporations Act 2001.
3. |
Directors responsibility |
The directors of Woodside (the Directors) are responsible for the preparation and presentation of the Merged Group Pro Forma Historical Financial
Information, including the basis of preparation, selection and determination of pro forma adjustments made to the Historical Financial Information and included in the Merged Group Pro Forma Historical Financial Information. This includes
responsibility for such internal controls as the Directors determine are necessary to enable the preparation of Merged Group Pro Forma Historical Financial Information that is free from material misstatement, whether due to fraud or error.
A member firm of Ernst &
Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
Our responsibility is to express a limited assurance conclusion on the Merged Group Pro Forma Historical Financial Information based on the procedures performed and the
evidence we have obtained.
We have conducted our engagement in accordance with the Standard on Assurance Engagements ASAE 3450 Assurance Engagements involving
Corporate Fundraisings and/or Prospective Financial Information.
Our limited assurance procedures consisted of making enquiries, primarily of persons
responsible for financial and accounting matters, and applying analytical and other limited assurance procedures. A limited assurance engagement is substantially less in scope than an audit conducted in accordance with Australian Auditing Standards
and consequently does not enable us to obtain reasonable assurance that we would become aware of all significant matters that might be identified in a reasonable assurance engagement. Accordingly, we do not express an audit opinion.
Our engagement did not involve updating or re-issuing any previously issued audit or limited assurance reports on any financial
information used as a source of the Merged Group Pro forma Historical Financial Information.
Merged Group Pro Forma Historical Financial Information
Based on our limited
assurance engagement, which is not an audit, nothing has come to our attention that causes us to believe that the Pro Forma Historical Financial Information of the Merged Group comprising:
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The Merged Group pro forma historical income statement for the year ended 31 December 2021 as set out in section 7.3 of the Explanatory Memorandum; |
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The Merged Group pro forma historical statement of financial position as at 31 December 2021 as set out in Section 7.4 of the Explanatory Memorandum; and |
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The Merged Group pro forma historical statement of cash flows for the year ended 31 December 2021 as set out in Section 7.5 of the Explanatory Memorandum, |
Is not presented fairly, in all material respects, in accordance with the stated basis of preparation, as described in Section 7.2
of the Explanatory Memorandum.
Without modifying our conclusions, we draw attention to Section 7.2 of the Explanatory
Memorandum, which describes the purpose of the Financial Information. As a result, the Merged Group Pro forma Historical Financial Information may not be suitable for
use for another purpose.
A member firm of Ernst &
Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
Ernst & Young has consented to the inclusion of this limited assurance report in the Explanatory Memorandum in the form and context in which it is included.
8. |
Independence or disclosure of interest |
Ernst & Young does not have any interests in the outcome of the Merger other than in the preparation of this report for which normal professional fees will be
received.
Yours faithfully
/s/ Ernst & Young
Ernst & Young
A member firm of Ernst &
Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
Annexure 2: BHP Petroleum Historical Financial Information
a) HISTORICAL FINANCIAL INFORMATION FOR HALF-YEAR ENDED 31 DECEMBER 2021
b) HISTORICAL FINANCIAL INFORMATION FOR YEARS ENDED 30 JUNE 2021, 2020 AND 2019
P a g e 178 |
180
BHP Petroleum Assets
Combined Financial Statements as of and
for the Half Year Ended 31 December 2021
BHP Petroleum Assets
Combined statement of profit or loss and comprehensive income or loss for the half year ended 31 December 2021
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Notes |
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Half year ended 31 Dec 2021 US$M |
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Half year ended 31 Dec 2020 US$M |
Revenue |
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2 |
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3,198 |
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1,602 |
Other income |
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3 |
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172 |
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20 |
Expenses excluding net finance costs |
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3 |
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(1,761) |
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(1,816) |
Loss from equity accounted investments |
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11 |
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(1) |
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(5) |
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Profit/(loss) from operations |
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1,608 |
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(199) |
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Finance expense |
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(124) |
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(277) |
Finance income |
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6 |
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39 |
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Net finance costs |
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(118) |
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(238) |
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Profit/(loss) before taxation |
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1,490 |
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(437) |
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Income tax (expense)/income |
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4 |
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(870) |
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34 |
Royalty - related taxation (net of income tax benefit) |
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4 |
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(37) |
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16 |
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Total taxation (expense)/income |
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(907) |
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50 |
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Profit/(loss) after taxation |
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583 |
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(387) |
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Other comprehensive income or loss |
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Items that may be reclassified subsequently to the income statement: |
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Exchange fluctuations on transactions of foreign operations taken to equity |
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1 |
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- |
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Total items that may be reclassified subsequently to the income statement |
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1 |
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- |
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Total other comprehensive loss |
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1 |
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- |
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Total comprehensive income/(loss) |
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584 |
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(387) |
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The accompanying notes form part of these half year financial statements.
1
BHP Petroleum Assets
Combined statement of financial position as at 31 December 2021
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Notes |
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31 Dec
2021 US$M |
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30 June
2021 US$M |
ASSETS |
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Current assets |
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Cash and cash equivalents |
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9 |
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992 |
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776 |
Trade and other receivables |
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5 |
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1,230 |
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908 |
Receivables from BHP Group |
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9,12 |
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10,852 |
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5,526 |
Inventories |
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278 |
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307 |
Current tax assets |
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69 |
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130 |
Other |
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14 |
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9 |
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Total current assets |
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13,435 |
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7,656 |
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Non-current assets |
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Trade and other receivables |
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5 |
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201 |
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157 |
Other financial assets |
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9 |
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37 |
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52 |
Property, plant and equipment |
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11,226 |
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11,854 |
Intangible assets |
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63 |
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78 |
Net investments and funding of equity accounted investments |
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11 |
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246 |
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253 |
Deferred tax assets |
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1,947 |
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2,182 |
Other |
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3 |
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3 |
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Total non-current assets |
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13,723 |
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14,579 |
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Total assets |
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27,158 |
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22,235 |
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LIABILITIES |
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Current liabilities |
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Trade and other payables |
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6 |
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952 |
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919 |
Payables to BHP Group |
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9,12 |
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12,552 |
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2,001 |
Interest bearing liabilities |
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38 |
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35 |
Other financial liabilities |
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9 |
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60 |
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9 |
Current tax payable |
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312 |
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280 |
Closure and rehabilitation provisions |
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7 |
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144 |
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141 |
Other provisions |
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8,10 |
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216 |
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315 |
Deferred income |
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16 |
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14 |
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Total current liabilities |
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14,290 |
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3,714 |
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Non-current liabilities |
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Non-current tax payable |
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69 |
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14 |
Payables to BHP Group |
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9,12 |
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- |
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10,347 |
Interest bearing liabilities |
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219 |
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234 |
Closure and rehabilitation provisions |
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7 |
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3,760 |
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3,816 |
Deferred tax liabilities |
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465 |
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610 |
Other provisions |
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8,10 |
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341 |
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344 |
Deferred income |
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40 |
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44 |
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Total non-current liabilities |
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4,894 |
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15,409 |
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Total liabilities |
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19,184 |
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19,123 |
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Net assets |
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7,974 |
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3,112 |
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EQUITY |
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7,974 |
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3,112 |
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The accompanying notes form part of these half year financial statements.
2
BHP Petroleum Assets
Combined statement of cash flows for the half year ended 31 December 2021
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Half year Ended 31 Dec 2021 US$M |
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Half year ended 31 Dec 2020 US$M |
Operating activities |
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Profit/(loss) before taxation |
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1,490 |
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(437) |
Adjustments for: |
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Depreciation and amortisation expense |
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1,047 |
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890 |
Impairments of property, plant and equipment and intangible assets |
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210 |
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61 |
Net finance costs |
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118 |
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238 |
Share of operating loss of equity accounted investments |
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1 |
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5 |
Other |
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(215) |
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(51) |
Changes in assets and liabilities: |
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Trade and other receivables |
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(630) |
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(122) |
Inventories |
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29 |
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(52) |
Trade and other payables |
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74 |
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25 |
Provisions and other assets and liabilities |
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(144) |
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(97) |
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Cash generated from operations |
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1,980 |
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460 |
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Dividends received |
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8 |
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10 |
Net interest paid |
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(104) |
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(119) |
Income taxes paid (including royalty taxes) |
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(496) |
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(245) |
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Net operating cash flows |
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1,388 |
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106 |
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Investing activities |
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Purchases of property, plant and equipment |
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(556) |
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(498) |
Exploration expenditure |
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(131) |
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(14) |
Investment in subsidiaries, operations and joint operations, net of cash |
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- |
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(482) |
Net investment and funding of equity accounted investments |
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(2) |
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(1) |
Other investing |
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- |
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(26) |
Proceeds from sale of assets |
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146 |
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41 |
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Net investing cash flows |
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(543) |
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(980) |
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Financing activities |
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Lease payments |
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(18) |
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(19) |
Repayments of long-term borrowing to BHP Group |
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- |
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(3,994) |
Net other financing with BHP Group |
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(633) |
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4,869 |
Currency valuation change |
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23 |
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(90) |
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Net financing cash flows |
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(628) |
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766 |
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Net increase/(decrease) in cash and cash equivalents |
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217 |
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(108) |
Cash and cash equivalents, net of overdrafts at the beginning of the period |
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776 |
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325 |
Foreign currency exchange rate changes on cash and cash equivalents |
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(1) |
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- |
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Cash and cash equivalents, net of overdrafts at the end of the period |
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992 |
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217 |
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The accompanying notes form part of these half year financial statements.
3
BHP Petroleum Assets
Combined statement of changes in equity for the half year ended 31 December 2021
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Share capital (1) US$M |
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Retained earnings US$M |
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Foreign
currency translation
reserve US$M |
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Total equity US$M |
Balance as at 1 July 2021 |
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15,234 |
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(15,610) |
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3,488 |
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3,112 |
Total comprehensive income/(loss) |
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- |
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583 |
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1 |
|
584 |
Deemed contributions from BHP Group |
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- |
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4,278 |
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- |
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4,278 |
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Balance as at 31 December 2021 |
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15,234 |
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(10,749) |
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3,489 |
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7,974 |
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Balance as at 1 July 2020 |
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15,234 |
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(13,997) |
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3,487 |
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4,724 |
Total comprehensive loss |
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- |
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(387) |
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- |
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(387) |
Deemed distributions to BHP Group |
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- |
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(1,252) |
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- |
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(1,252) |
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Balance as at 31 December 2020 |
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15,234 |
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(15,636) |
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3,487 |
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3,085 |
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(1) |
Number of shares outstanding of BHP Petroleum International Pty Ltd (Parent of BHP Petroleum) for the reporting periods
ended 31 December 2021 and 2020 were 18,876,136,568. |
The accompanying notes form part of these half year financial
statements.
4
BHP Petroleum Assets
Notes to the Combined Financial Statements
1. Organisation and summary
of significant accounting policies
Organisation
BHP Petroleum Assets are a subset of certain entities wholly owned by BHP Group Limited. The subset of entities primarily represents BHP Group
Limiteds interests in its petroleum businesses, whose principal activities are the exploration, development and production of oil and gas. These petroleum businesses comprise of oil and gas assets located in the United States (US), Gulf of
Mexico, Australia, Trinidad and Tobago, Algeria and Mexico and appraisal and exploration options in Trinidad and Tobago, central and western US Gulf of Mexico, eastern Canada, Egypt and Barbados. The purpose of these
non-statutory half year combined financial statements is to provide general purpose historical financial information of the BHP Petroleum Assets for inclusion in listing documents to be issued by Woodside
Petroleum Limited, which has entered into a share sale agreement to combine with BHP Petroleum Assets (Proposed Transaction).
These half year
combined financial statements include financial information that is limited to the legal entities carved out (BHP Petroleum) from BHP Group Limited (BHP Group), in connection with the Proposed Transaction. BHP Petroleum consists of BHP Petroleum
International Pty Ltd and the entities it controls, except for the following entities:
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BHP Billiton Petroleum Great Britain Limited |
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BHP Mineral Resources Inc. |
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BHP Copper Inc. and its subsidiaries |
BHP Petroleum International Pty Ltd, the Parent of BHP Petroleum, is a proprietary limited company domiciled in Western Australia, Australia. The
registered office of BHP Petroleum International Pty Ltd is 125 St Georges Terrace, Perth WA 6000.
Ultimate group company
BHP Group Limited, a company incorporated in the state of Victoria, Australia, is the ultimate Parent company. Copies of the ultimate Parent
companys financial statements are available from BHP Centre, 171 Collins Street, Melbourne Victoria 3000, Australia.
Basis of presentation
The combined financial statements for the half year ended 31 December 2021 are unaudited and have been prepared in accordance with IAS 34
Interim Financial Reporting as issued by the International Accounting Standards Board (IASB). The half year combined financial statements represent a condensed set of financial statements and do not include all of the
information required for a full annual report and are to be read in conjunction with the most recent audited fiscal year BHP Petroleum financial statements.
The same accounting policies and methods of computation are followed in the interim financial statements as compared with the most recent audited
annual financial statements.
All amounts are expressed in US dollars unless otherwise stated. BHP Petroleums presentation currency and the
functional currency of the majority of its operations is US dollars as this is the principal currency of the economic environment in which it operates. Amounts in this half year financial report have, unless otherwise indicated, been rounded to the
nearest million dollars.
5
BHP Petroleum Assets
Notes to the Combined Financial Statements
At 31 December 2021 BHP Petroleum had net amounts payable to BHP Group of US$1,700 million.
Under the terms of the Share Sale Agreement, between BHP Group and Woodside Petroleum Limited, intra-group funding arrangements are required to be repaid or otherwise eliminated. BHP Petroleum expects to settle intercompany balances with BHP Group
either as a capital injection or loan forgiveness neither of which will involve an outflow of cash in order to satisfy the terms of the Share Sale Agreement. BHP Petroleum has made an assessment of its ability to continue as a going concern over the
period to 4 March 2023 (the going concern period) and believes that it has sufficient financial resources to meet its obligations as they fall due throughout the going concern period. As such, the financial statements continue to be prepared on
a going concern basis.
2. Revenue
The following table
provides a summary of BHP Petroleums revenue by geographic location:
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Half
year ended 31 Dec 2021
US$M |
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Half
year ended 31 Dec 2020
US$M |
Australia |
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761 |
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501 |
North America |
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1,025 |
|
454 |
United Kingdom |
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- |
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15 |
Rest of Europe |
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113 |
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79 |
Japan |
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270 |
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167 |
South Korea |
|
38 |
|
16 |
China |
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35 |
|
38 |
Other Asia |
|
763 |
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265 |
Rest of World |
|
193 |
|
67 |
|
|
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Total revenue |
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3,198 |
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1,602 |
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|
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6
BHP Petroleum Assets
Notes to the Combined Financial Statements
The following table provides a summary of BHP Petroleums revenue by asset:
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Half
year ended 31 Dec 2021
US$M |
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Half
year ended 31 Dec 2020
US$M |
Australia Production Unit (1) |
|
225 |
|
123 |
Bass Strait |
|
775 |
|
478 |
North West Shelf |
|
865 |
|
402 |
Atlantis |
|
517 |
|
212 |
Shenzi |
|
326 |
|
137 |
Mad Dog |
|
157 |
|
88 |
Trinidad and Tobago |
|
206 |
|
68 |
Algeria |
|
108 |
|
75 |
Third-party products |
|
6 |
|
3 |
Other |
|
13 |
|
16 |
|
|
|
|
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Total revenue |
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3,198 |
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1,602 |
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(1) |
Australia Production Unit includes Macedon and Pyrenees. |
The following table provides a summary of BHP Petroleums revenue by product:
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Half
year ended 31 Dec 2021
US$M |
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Half
year ended 31 Dec 2020
US$M |
Crude oil |
|
1,656 |
|
772 |
Gas |
|
1,334 |
|
712 |
Natural gas liquids |
|
183 |
|
93 |
Other |
|
25 |
|
25 |
|
|
|
|
|
Total revenue |
|
3,198 |
|
1,602 |
|
|
|
|
|
Revenue consists of revenue from contracts with customers of US$3,187 million (31 December 2020: US$1,583
million) and other revenue of US$11 million (31 December 2020: US$19 million).
7
BHP Petroleum Assets
Notes to the Combined Financial Statements
3. Expenses and other income
|
|
|
|
|
|
|
Half
year ended
31 Dec 2021
US$M |
|
Half
year ended
31 Dec 2020
US$M |
Employee benefits expense: |
|
|
|
|
Wages, salaries and redundancies |
|
147 |
|
183 |
Employee share awards |
|
11 |
|
17 |
Pension and other post-retirement obligations |
|
30 |
|
32 |
Less employee benefits expense classified as exploration and evaluation expenditure |
|
(31) |
|
(48) |
Changes in inventories of finished goods |
|
12 |
|
(9) |
Raw materials and consumables used |
|
57 |
|
45 |
Freight and transportation |
|
62 |
|
40 |
External services |
|
274 |
|
302 |
Third-party commodity purchases |
|
7 |
|
3 |
Net foreign exchange losses |
|
(5) |
|
32 |
Government royalties paid and payable |
|
119 |
|
44 |
Exploration and evaluation and expenditure incurred and expensed in the period |
|
112 |
|
181 |
Depreciation and amortisation expense |
|
1,047 |
|
890 |
Fair value change on derivatives |
|
32 |
|
1 |
Net impairments: |
|
|
|
|
Property, plant and equipment
(1) |
|
210 |
|
57 |
Intangible assets |
|
- |
|
4 |
Other expenses
(2) |
|
(323) |
|
42 |
|
|
|
|
|
Total expenses |
|
1,761 |
|
1,816 |
|
|
|
|
|
|
|
|
|
|
Dividend income |
|
1 |
|
5 |
Gain from sell-down of Scarborough interest (3) |
|
104 |
|
- |
Other income
(4) |
|
67 |
|
15 |
|
|
|
|
|
Total other income |
|
172 |
|
20 |
|
|
|
|
|
|
(1) |
At 31 December 2021, the overall recoverable amount of the Ruby operations in offshore Trinidad and Tobago was
determined to be US$107 million, resulting in an impairment charge of US$210 million against property, plant and equipment. The valuation of Ruby is most sensitive to changes in reserves, with the impairment driven by revisions to
estimated reserves resulting from technical analysis of well drilling results and performance following project completion in December 2021. Recoverable amount for the impairment assessment was determined based on Rubys value in use. |
|
|
(2) |
Half year ended 31 December 2021 includes US$355 million LNG underlift valuation movement. |
|
|
(3) |
Gain attributable to Final Investment Decision (FID) of the Scarborough project pursuant to the 2016 divestment of BHP
Petroleums 25 per cent Scarborough Joint Venture interest to Woodside. |
|
|
(4) |
Other income includes boat charter, tax barrel income, tariff revenue, income from licensing agreements and sublease
income. |
|
8
BHP Petroleum Assets
Notes to the Combined Financial Statements
4. Income tax
|
|
|
|
|
|
|
Half
year ended
31 Dec 2021
US$M |
|
Half
year ended
31 Dec 2020
US$M |
Total taxation expense/(income) comprises: |
|
|
|
|
Current tax expense |
|
822 |
|
228 |
Deferred tax expense/(benefit) |
|
85 |
|
(278) |
|
|
|
|
|
|
|
907 |
|
(50) |
|
|
|
|
|
|
|
|
|
|
Half
year ended
31 Dec 2021
US$M |
|
Half
year ended
31 Dec 2020
US$M |
Factors affecting income tax expense/(income) for the half year |
|
|
|
|
Income tax expense differs to the standard rate of corporation tax as follows: |
|
|
|
|
Profit/(loss) before taxation |
|
1,490 |
|
(437) |
|
|
|
|
|
Tax expense/(benefit) at Australian prima facie tax rate of 30 per cent |
|
447 |
|
(131) |
|
|
|
|
|
Non-tax effected operating losses and capital gains |
|
188 |
|
156 |
Tax effect of loss from equity accounted investments, related impairments and expenses |
|
- |
|
1 |
Amounts under provided in prior periods |
|
55 |
|
65 |
Recognition of previously unrecognised tax assets |
|
1 |
|
- |
Foreign exchange adjustments |
|
33 |
|
(87) |
Impact of tax rates applicable outside of Australia |
|
(3) |
|
5 |
Other (1) |
|
149 |
|
(43) |
|
|
|
|
|
Income tax expense/(income) |
|
870 |
|
(34) |
|
|
|
|
|
Royalty-related taxation (net of income tax benefit) |
|
37 |
|
(16) |
|
|
|
|
|
Total taxation expense/(income) |
|
907 |
|
(50) |
|
|
|
|
|
|
(1) |
Includes US$163 million tax expense related to the taxable gain on the disposal of Hamilton Oil Company Incs
interest in BHP Billiton Petroleum Great Britain Limited, refer to Note 12 Related party transactions |
|
9
BHP Petroleum Assets
Notes to the Combined Financial Statements
5. Trade and other receivables
|
|
|
|
|
|
|
31 Dec
2021 US$M |
|
30 June
2021 US$M |
Trade receivables |
|
319 |
|
358 |
Joint operations partner receivables (1) |
|
764 |
|
384 |
Value-added tax (VAT) and other tax related receivables |
|
288 |
|
262 |
Other receivables |
|
60 |
|
61 |
|
|
|
|
|
Total trade and other receivables |
|
1,431 |
|
1,065 |
|
|
|
|
|
Comprising: |
|
|
|
|
Current |
|
1,230 |
|
908 |
Non-current |
|
201 |
|
157 |
|
|
|
|
|
|
(1) |
Joint operations partner receivables include production underlift positions and receivables for joint operations cash
float arrangements. |
6. Trade and other payables
|
|
|
|
|
|
|
31 Dec
2021 US$M |
|
30 June
2021 US$M |
Trade payables external |
|
638 |
|
641 |
Other payables |
|
314 |
|
278 |
|
|
|
|
|
Total trade and other payables |
|
952 |
|
919 |
|
|
|
|
|
10
BHP Petroleum Assets
Notes to the Combined Financial Statements
7. Closure and rehabilitation provisions
A reconciliation of the changes in the closure and rehabilitation provisions is shown in the following table:
|
|
|
|
|
|
|
31 Dec
2021 US$M |
|
30 June
2021 US$M |
At the beginning of the period |
|
3,957 |
|
3,595 |
Capitalised amounts for operating sites: |
|
|
|
|
Change in estimate |
|
13 |
|
131 |
Exchange translation |
|
(71) |
|
162 |
Adjustments charged/(credited) to the income statement for closed sites: |
|
|
|
|
Change in estimate |
|
(1) |
|
17 |
Exchange translation |
|
(6) |
|
10 |
Other adjustments to the provision: |
|
|
|
|
Amortisation of discounting impacting net finance costs |
|
58 |
|
94 |
Acquisition of subsidiaries and operations |
|
- |
|
179 |
Divestment and demerger of subsidiaries and operations |
|
- |
|
(81) |
Expenditure on closure and rehabilitation activities |
|
(43) |
|
(152) |
Exchange variations impacting foreign currency translation reserve |
|
(3) |
|
2 |
|
|
|
|
|
At the end of the period |
|
3,904 |
|
3,957 |
|
|
|
|
|
Comprising: |
|
|
|
|
Current |
|
144 |
|
141 |
Non-current |
|
3,760 |
|
3,816 |
|
|
|
|
|
Operating sites |
|
3,580 |
|
3,623 |
Closed sites |
|
324 |
|
334 |
|
|
|
|
|
BHP Petroleum is required to rehabilitate sites and associated facilities at the end of, or in some cases, during the
course of production, to a condition acceptable to the relevant authorities, at the time rehabilitation occurs, and in accordance with BHP Groups environmental performance requirements as set out within the BHP Group Charter. The requirements
of the relevant authorities vary by jurisdiction and are often non-prescriptive.
The key components of
closure and rehabilitation activities are:
|
● |
|
the removal of certain infrastructure associated with an operation |
|
● |
|
the return of disturbed areas to a safe, stable, productive and self-sustaining condition, consistent with agreed end
use. |
The recognition and measurement of closure and rehabilitation provisions requires the use of significant estimates and
assumptions, including, but not limited to:
|
● |
|
the extent (due to legal or constructive obligations) of potential activities required for the removal of infrastructure
and rehabilitation activities |
|
● |
|
costs associated with future rehabilitation activities |
|
● |
|
applicable discount rates |
|
● |
|
the timing of cash flows and ultimate closure of operations. |
11
BHP Petroleum Assets
Notes to the Combined Financial Statements
Many rehabilitation activities are expected to occur a number of years in the future and the precise
requirements that will have to be met when the rehabilitation occurs is currently uncertain. Decommissioning technologies and costs are constantly changing, as are political, environmental, safety and public expectations.
Management determines the best estimate of future closure and rehabilitation cash flows by weighting a range of possible scenarios, including only
partial removal of offshore infrastructure where BHP Petroleum believes it will be able demonstrate to the relevant regulators, that such an approach will result in better environmental, safety and asset integrity outcomes.
While the closure and rehabilitation provisions reflect managements best estimates based on current knowledge and information, further studies and
detailed analysis of the closure activities for individual assets will be performed as the assets near the end of their operational life and/or detailed closure plans are required to be submitted to, and agreed with, relevant regulatory authorities.
Such studies and analysis can impact the estimated costs of closure activities. Estimates can also be impacted by the emergence of new restoration techniques, changes in regulatory requirements for rehabilitation, risks relating to climate change
and the transition to a low carbon economy and experience at other operations. These uncertainties may result in future actual expenditure differing from the amounts currently provided for in the balance sheet.
8. Other provisions
The disclosure
below excludes closure and rehabilitation provisions (refer to Note 7 Closure and rehabilitation provisions), employee benefits, restructuring and post-retirement employee benefits provisions (refer to Note 10 Employee benefits,
restructuring and post-retirement employee benefits provisions).
A reconciliation of changes in other provisions for other liabilities is
shown in the following table:
|
|
|
|
|
|
|
31 Dec
2021 US$M |
|
30 June
2021 US$M |
At the beginning of the period |
|
233 |
|
168 |
Charge/(credit) for the year: |
|
|
|
|
Disposals |
|
- |
|
(1) |
Underlying |
|
9 |
|
122 |
Discounting |
|
- |
|
1 |
Exchange variations |
|
(3) |
|
6 |
Released during the period |
|
(14) |
|
(7) |
Utilisation |
|
(10) |
|
(57) |
Transfers and other movements |
|
(2) |
|
1 |
|
|
|
|
|
At the end of the period |
|
213 |
|
233 |
|
|
|
|
|
Comprising: |
|
|
|
|
Current |
|
131 |
|
137 |
Non-current |
|
82 |
|
96 |
|
|
|
|
|
12
BHP Petroleum Assets
Notes to the Combined Financial Statements
9. Fair value measurement
All financial assets and financial liabilities are initially recognised at the fair value of consideration paid or received, net of transaction costs as
appropriate and subsequently carried at fair value or amortised cost. The financial assets and liabilities are presented by class in the tables below at their carrying values, which generally approximate to fair values.
The carrying amount of financial assets and liabilities measured at fair value is principally calculated based on inputs other than quoted prices that
are observable for these financial assets or liabilities, either directly (i.e. as unquoted prices) or indirectly (i.e. derived from prices). Where no price information is available from a quoted market source, alternative market mechanisms or
recent comparable transactions, fair value is estimated based on BHP Petroleums views on relevant future prices, net of valuation allowances to accommodate liquidity, modelling and other risks implicit in such estimates.
The valuation techniques used by BHP Petroleum to measure fair value include the use of internally developed methodologies and models that result in
managements best estimate of fair value. Inputs used in the valuation include, but are not limited to, future commodity prices, market discount rates and consideration of risks specific to the asset or liability being fair valued.
If, at inception of a contract, the valuation cannot be supported by observable market data, any gain or loss determined by the valuation methodology is
not recognised in the income statement but deferred on the balance sheet and is commonly known as day-one gain or loss. This deferred gain or loss is recognised in the income statement over the
life of the contract until substantially all the remaining contract term can be valued using observable market data at which point any remaining deferred gain or loss is recognised in the income statement. Changes in valuation subsequent to the
initial valuation at inception of a contract are recognised immediately in the income statement.
For financial assets and liabilities carried at
fair value, BHP Petroleum uses the following to categorise the method used based on the lowest level input that is significant to the fair value measurement as a whole:
Level 1 Based on quoted process (unadjusted) in active markets for identical financial assets and liabilities
Level 2 Based on inputs other than quoted prices included within Level 1 that are observable for the financial asset or
liability
Level 3 Based on inputs not observable in the market using appropriate valuation models, including discounted
cash flow modelling
13
BHP Petroleum Assets
Notes to the Combined Financial Statements
For financial instruments that are carried at fair value on a recurring basis, BHP Petroleum determines
whether transfers have occurred between levels in the hierarchy by reassessing categorisation at the end of each reporting period. There were no transfers between categories during the period.
|
|
|
|
|
|
|
|
|
|
|
IFRS 13 Fair value
hierarchy Level |
|
IFRS 9
Classification |
|
31 Dec
2021 US$M |
|
30 June 2021
US$M |
Cash and cash equivalents |
|
|
|
Amortised cost |
|
992 |
|
776 |
Trade and other receivables |
|
|
|
Amortised cost |
|
1,431 |
|
1,065 |
Receivables from BHP Group |
|
|
|
Amortised cost |
|
10,852 |
|
5,526 |
Other financial assets
(1) |
|
3 |
|
Fair value through
profit or loss |
|
37 |
|
51 |
|
|
|
|
|
|
|
|
|
Total financial assets |
|
|
|
|
|
13,312 |
|
7,418 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trade and other payables |
|
|
|
Amortised cost |
|
952 |
|
919 |
Payables to BHP Group |
|
|
|
Amortised cost |
|
12,552 |
|
12,348 |
Other financial liabilities |
|
3 |
|
Fair value through
profit or loss |
|
60 |
|
9 |
Interest bearing liabilities |
|
|
|
Amortised cost |
|
257 |
|
269 |
|
|
|
|
|
|
|
|
|
Total financial
liabilities |
|
|
|
|
|
13,821 |
|
13,545 |
|
|
|
|
|
|
|
|
|
|
(1) |
Includes US$ nil (30 June 2021: US$46 million) contingent consideration receivable and US$37 million
(30 June 2021: US$5 million) derivatives embedded in physical commodity purchase contract. |
|
The carrying value of Other financial assets and Other financial liabilities includes an embedded derivative
resulting from a physical commodity (gas) purchase and sale contract in Trinidad and Tobago. The carrying value of the embedded derivative at 31 December 2021 was a net liability of US$23 million (30 June 2021: net liability of US$4
million).
The following table presents the impact of activity for financial instruments classified as Level 3 in the fair value hierarchy:
|
|
|
|
|
|
|
31 Dec
2021 US$M |
|
30 June
2021 US$M |
Fair value at the beginning of the period |
|
42 |
|
72 |
Losses recognised in income statement |
|
(10) |
|
(10) |
Settlements |
|
(55) |
|
(20) |
|
|
|
|
|
Net fair value at the end of the period |
|
(23) |
|
42 |
|
|
|
|
|
14
BHP Petroleum Assets
Notes to the Combined Financial Statements
10. Employee benefits, restructuring and post-retirement employee benefits provisions
|
|
|
|
|
|
|
31 Dec
2021 US$M |
|
30 June
2021 US$M |
Employee benefits provisions
(1) |
|
78 |
|
147 |
Restructuring provisions
(2) |
|
7 |
|
31 |
Post-retirement employee benefits provisions |
|
259 |
|
248 |
|
|
|
|
|
Total provisions |
|
344 |
|
426 |
|
|
|
|
|
Comprising: |
|
|
|
|
Current |
|
85 |
|
178 |
Non-current |
|
259 |
|
248 |
|
|
|
|
|
|
(1) |
The expenditure associated with total employee benefits will occur in a pattern consistent with when employees choose to
exercise their entitlement to benefits. |
|
|
(2) |
Total restructuring provisions include provisions for terminations. |
|
|
|
|
|
|
|
|
|
|
|
|
Employee
benefits (1)
US$M |
|
Restructuring (2) US$M |
|
Post-
retirement
employee benefits
US$M |
|
Total
US$M |
As at 30 June 2021 |
|
147 |
|
31 |
|
248 |
|
426 |
Charge/(credit) for the year: |
|
|
|
|
|
|
|
|
Underlying |
|
47 |
|
1 |
|
12 |
|
60 |
Discounting |
|
- |
|
- |
|
6 |
|
6 |
Net interest expense |
|
- |
|
- |
|
(2) |
|
(2) |
Exchange variations |
|
(1) |
|
- |
|
- |
|
(1) |
Released during the year |
|
(1) |
|
- |
|
(10) |
|
(11) |
Utilisation |
|
(114) |
|
(25) |
|
5 |
|
(134) |
|
|
|
|
|
|
|
|
|
As at 31 December 2021 |
|
78 |
|
7 |
|
259 |
|
344 |
|
|
|
|
|
|
|
|
|
|
(1) |
The expenditure associated with total employee benefits will occur in a pattern consistent with when employees choose to
exercise their entitlement to benefits. |
|
|
(2) |
Total restructuring provisions include provisions for terminations. |
|
BHP Petroleum contributed US$18 million during the half year ended 31 December 2021 (31 December
2020: US$19 million) to defined contribution plans and multi-employer defined contribution plans.
15
BHP Petroleum Assets
Notes to the Combined Financial Statements
11.Investments in associates
Ownership interest for BHP Petroleums investments in associates, which are operated in the US, are listed in the table below:
|
|
|
|
|
|
|
Associates |
|
Principal activity |
|
Reporting date |
|
Ownership
interest % (1) |
Caesar Oil Pipeline Company LLC |
|
Hydrocarbons transportation |
|
31 December |
|
25 |
Cleopatra Gas Gathering Company LLC |
|
Hydrocarbons transportation |
|
31 December |
|
22 |
Marine Well Containment Company LLC |
|
Oil spill services |
|
31 December |
|
10 |
|
(1) |
Reflects BHP Petroleums ownership interest as at 31 December 2021 and 31 December 2020.
|
The following table summarises the financial information relating to each of BHP Petroleums significant equity accounted
investments:
|
|
|
|
|
|
|
Half
year ended 31 Dec 2021
US$000 |
|
Half
year ended 31 Dec 2020
US$000 |
Share of profit/(loss) of equity accounted investments: |
|
|
|
|
Caesar Oil Pipeline Company LLC |
|
3,694 |
|
2,325 |
Cleopatra Gas Gathering Company LLC |
|
1,511 |
|
559 |
Marine Well Containment Company LLC |
|
(6,523) |
|
(7,412) |
|
|
|
|
|
Share of loss of equity accounted investments |
|
(1,318) |
|
(4,528) |
|
|
|
|
|
|
|
|
|
|
Dividends received |
|
6,909 |
|
4,993 |
Contributions |
|
(1,500) |
|
(1,260) |
12. Related party transactions
Transactions with equity accounted investments
The following transactions took place during the half year with equity accounted investments:
|
|
|
|
|
|
|
Half
year ended 31 Dec 2021
US$M |
|
Half
year ended 31 Dec 2020
US$M |
Purchases of goods/services |
|
10 |
|
7 |
Dividends received |
|
7 |
|
5 |
16
BHP Petroleum Assets
Notes to the Combined Financial Statements
Outstanding balances with related parties
|
|
|
|
|
|
|
|
|
|
|
Equity Accounted
Investments |
|
BHP Group Entities |
|
|
31 Dec
2021 US$M |
|
30 June
2021 US$M |
|
31 Dec
2021 US$M |
|
30 June
2021 US$M |
Amounts receivable from BHP Group |
|
- |
|
- |
|
10,852 |
|
5,526 |
Trade amounts owed to related parties |
|
1 |
|
2 |
|
- |
|
- |
Amounts payable to BHP Group |
|
- |
|
- |
|
12,552 |
|
12,348 |
BHP Petroleum has financing arrangements with BHP Group for short-term cash management. As at 31 December 2021
current amounts receivable from BHP Group related to these financing arrangements was US$10,852 million (30 June 2021: US$5,526 million). These amounts are included in Receivables from BHP Group on the balance sheet. During the half year
ended 31 December 2021, BHP Petroleum entities Hamilton Oil Company Inc. and BHP Petroleum Investments (Great Britain) Pty Ltd sold their respective shareholdings in BHP Billiton Petroleum Great Britain Limited and BHP BK Limited for
US$4.3 billion to BHP Group companies outside the Proposed Transaction boundary. As the disposed entities are outside of the Proposed Transaction boundary and excluded from the BHP Petroleum Assets financial statements, the proceeds from the
sale were recorded as an equity transaction between BHP Petroleum and BHP Group with no gain or loss recognised in earnings. As at 31 December 2021 the amounts receivable from BHP Group related to the divestment was US$4.3 billion,
included in Receivables from BHP Group on the balance sheet. For tax purposes, the sale generated a taxable gain which did not result in current taxes payable as it was offset by a reduction of BHP Petroleums net operating loss deferred tax
asset. Tax expense of US$163 million related to the taxable gain has been recognized in BHP Petroleums financial statements.
BHP
Petroleum also entered into long-term debt agreements with BHP Group to finance its projects. As at 31 December 2021 and 30 June 2021, the outstanding balance relating to these agreements was US$10,347 million. This balance was
recorded as a non-current liability in Payables to BHP Group at 30 June 2021 and was reclassed to a current liability in Payables to BHP Group as it became current at 31 December 2021. As at
31 December 2021 current amounts payable to BHP Group related to financing arrangements outside the long-term debt agreements were US$2,205 million (30 June 2021: US$2,001 million). These amounts are included in Payables to BHP Group
on the balance sheet.
Interest expense related to the long-term debt, recorded in Finance expense in the income statement, for the half year ended
31 December 2021 was US$101 million (31 December 2020: US$148 million). The long-term debt agreements with BHP Group are entered at 3-month USD LIBOR plus margin. The margin ranges between
1.3 per cent and 1.8 per cent. The long-term debt agreements have a maturity date between November 2022 and December 2022.
There are no
expected credit losses related to balances from related parties at 31 December 2021 and 30 June 2021.
BHP Petroleum has entered into
various performance and corporate guarantees with certain BHP Group entities in the normal course of business. As at 31 December 2021, BHP Petroleum had outstanding guarantees as follows:
17
BHP Petroleum Assets
Notes to the Combined Financial Statements
Guarantees provided by BHP Petroleum:
|
● |
|
corporate guarantee given to financial institutions that manage future trades in order to hedge oil and gas production
with maximum exposure of US$1 million |
Guarantees received by BHP Petroleum:
|
● |
|
corporate guarantee received for regulatory requirements for drilling in the amount of US$24 million
|
|
● |
|
corporate guarantee received for exploration licenses in the amount of US$249 million |
|
● |
|
corporate guarantee received for Outer Continental Shelf Right of Way Grant Bond in the amount of US$3 million
|
|
● |
|
corporate guarantee received for plugging and abandonment of wells in the amount of US$12 million
|
The likelihood of these performance and corporate guarantees being called upon is considered remote.
13. Subsequent events
No matters or circumstances have
arisen since the end of the half year, 31 December 2021, that have significantly affected, or may significantly affect, the operations, results of operations or state of affairs of BHP Petroleum in subsequent accounting periods.
18
|
|
|
|
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|
|
Ernst & Young 8 Exhibition Street Melbourne VIC 3000 Australia
GPO Box 67 Melbourne VIC 3001 |
|
Tel: +61 3 9288 8000 Fax: +61 3 8650 7777 ey.com/au |
Review Report of Independent Auditors to the Shareholder and the Board of Directors of BHP Petroleum International Pty Ltd
We have reviewed the condensed combined financial information of BHP Petroleum Assets, which comprise the combined statement of financial position as of
31 December 2021, and the related combined statements of profit or loss and comprehensive income or loss, statement of cash flows and statement of changes in equity for the half year ended 31 December 2021.
Managements Responsibility for the Financial Information
Management is
responsible for the preparation and fair presentation of the condensed combined financial information in conformity with IAS 34 Interim Financial Reporting as issued by the International Accounting Standards Board (IASB) ; this includes the
design, implementation and maintenance of internal control sufficient to provide a reasonable basis for the preparation and fair presentation of interim financial information in conformity with IAS 34 Interim Financial Reporting.
Auditors Responsibility
Our responsibility is to conduct our review in
accordance with auditing standards generally accepted in the United States of America applicable to reviews of interim financial information. A review of interim financial information consists principally of applying analytical procedures and making
inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with auditing standards generally accepted in the United States of America, the objective of which is the
expression of an opinion regarding the financial information. Accordingly, we do not express such an opinion.
Conclusion
Based on our review, we are not aware of any material modifications that should be made to the condensed combined financial information referred to above for it to be in
conformity with IAS 34 Interim Financial Reporting as issued by IASB.
Report on combined statement of financial position as of 30 June 2021
We have previously audited, in accordance with auditing standards generally accepted in the United States of America, the combined statement of financial position of BHP
Petroleum Assets as of 30 June 2021, and the related combined statements of profit or loss and comprehensive income or loss, statement of cash flows and statement of changes in equity for the year then ended; and we expressed an unmodified
audit opinion on those audited combined financial statements in our report dated 17 December 2021. In our opinion, the accompanying combined statement of financial position of BHP Petroleum Assets as of 30 June 2021, is consistent, in all
material respects, with the combined statement of financial position from which it has been derived.
Ernst and Young
Melbourne, Australia
4 March 2022
A member firm of Ernst & Young
Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
BHP Petroleum Assets
Combined Financial Statements as of and
for the Years Ended 30 June 2021, 2020 and 2019
Report of Independent Auditors
Report of Independent Auditors
|
|
|
|
|
|
|
Ernst & Young 8 Exhibition Street
Melbourne VIC 3000 Australia GPO Box
67 Melbourne VIC 3001 |
|
Tel: +61 3 9288 8000 Fax: +61 3 8650 7777
ey.com/au |
Report of Independent Auditors to the Shareholder and the Board of Directors of BHP Petroleum International Pty Ltd
We have audited the accompanying combined financial statements of BHP Petroleum Assets, which comprise the combined statement of financial position as of 30 June
2021 and 2020, and the related combined statements of profit or loss and other comprehensive income, cash flows and changes in equity for the years then ended, and the related notes to the combined financial statements (collectively referred to as
the financial statements).
Managements responsibility for the financial statements
Management is responsible for the preparation and fair presentation of these financial statements in conformity with International Financial Reporting Standards as
issued by the International Accounting Standards Board; this includes the design, implementation and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free of material misstatement,
whether due to fraud or error.
Auditors responsibility
Our
responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.
An audit involves performing
procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors judgment, including the assessment of the risks of material misstatement of the financial
statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entitys preparation and fair presentation of the financial statements in order to design audit procedures that
are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entitys internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of
accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our audit opinion.
Opinion
In our
opinion, the financial statements referred to above present fairly, in all material respects, the combined financial position of BHP Petroleum Assets at June 30, 2020 and 2021, and the combined results of their operations and their cash flows
for the years then ended in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board.
Report on comparative information
We have not
audited, reviewed or compiled the comparative combined information presented herein as of and for the year ended June 30, 2019, and, accordingly, we express no opinion on it.
Ernst & Young
Melbourne, Australia
17 December 2021
A member
firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards
Legislation
BHP Petroleum Assets
Combined statement of profit or loss and comprehensive income or loss for the years ended 30 June 2021, 2020 and
2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes |
|
|
2021 US$M |
|
|
2020 US$M |
|
|
Unaudited 2019 US$M |
|
Continuing operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue |
|
|
3 |
|
|
|
3,909 |
|
|
|
3,997 |
|
|
|
5,867 |
|
Other income |
|
|
4 |
|
|
|
130 |
|
|
|
57 |
|
|
|
32 |
|
Expenses excluding net finance costs |
|
|
4 |
|
|
|
(3,799) |
|
|
|
(3,390) |
|
|
|
(3,510) |
|
Loss from equity accounted investments |
|
|
21 |
|
|
|
(6) |
|
|
|
(4) |
|
|
|
(2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit from operations |
|
|
|
|
|
|
234 |
|
|
|
660 |
|
|
|
2,387 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Finance expense |
|
|
9, 17 |
|
|
|
(464) |
|
|
|
(660) |
|
|
|
(1,001) |
|
Finance income |
|
|
|
|
|
|
56 |
|
|
|
304 |
|
|
|
364 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net finance costs |
|
|
|
|
|
|
(408) |
|
|
|
(356) |
|
|
|
(637) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit/(loss) before taxation |
|
|
|
|
|
|
(174) |
|
|
|
304 |
|
|
|
1,750 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense |
|
|
|
|
|
|
(211) |
|
|
|
(400) |
|
|
|
(925) |
|
Royalty - related taxation (net of income tax benefit) |
|
|
|
|
|
|
24 |
|
|
|
(82) |
|
|
|
(164) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total taxation expense |
|
|
5 |
|
|
|
(187) |
|
|
|
(482) |
|
|
|
(1,089) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit/(loss) after taxation from Continuing operations |
|
|
|
|
|
|
(361) |
|
|
|
(178) |
|
|
|
661 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Discontinued operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss after taxation from Discontinued operations |
|
|
24 |
|
|
|
- |
|
|
|
- |
|
|
|
(335) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit/(loss) after taxation from Continuing and Discontinued operations |
|
|
|
|
|
|
(361) |
|
|
|
(178) |
|
|
|
326 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Attributable to non-controlling interests |
|
|
|
|
|
|
- |
|
|
|
- |
|
|
|
7 |
|
Attributable to BHP shareholders |
|
|
|
|
|
|
(361) |
|
|
|
(178) |
|
|
|
319 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income or loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Items that may be reclassified subsequently to the income statement: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exchange fluctuations on transactions of foreign operations taken to equity |
|
|
|
|
|
|
- |
|
|
|
1 |
|
|
|
1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total items that may be reclassified subsequently to the income statement |
|
|
|
|
|
|
- |
|
|
|
1 |
|
|
|
1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Items that will not be reclassified to the income statement: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Re-measurement gain/(loss) on pension & medical
schemes |
|
|
18 |
|
|
|
1 |
|
|
|
(14) |
|
|
|
(10) |
|
Tax recognised within other comprehensive income |
|
|
|
|
|
|
- |
|
|
|
3 |
|
|
|
2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total items that will not be reclassified to the income statement |
|
|
|
|
|
|
1 |
|
|
|
(11) |
|
|
|
(8) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total other comprehensive income/(loss) |
|
|
|
|
|
|
1 |
|
|
|
(10) |
|
|
|
(7) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive income/(loss) |
|
|
|
|
|
|
(360) |
|
|
|
(188) |
|
|
|
319 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Attributable to non-controlling interests |
|
|
|
|
|
|
- |
|
|
|
- |
|
|
|
7 |
|
Attributable to BHP shareholders |
|
|
|
|
|
|
(360) |
|
|
|
(188) |
|
|
|
312 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes form part of these financial statements.
2
BHP Petroleum Assets
Combined statement of financial position as at 30 June 2021, 2020 and 2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes |
|
|
2021 US$M |
|
|
2020 US$M |
|
|
Unaudited 2019 US$M |
|
ASSETS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
|
9, 17 |
|
|
|
776 |
|
|
|
325 |
|
|
|
1,398 |
|
Trade and other receivables |
|
|
6 |
|
|
|
908 |
|
|
|
673 |
|
|
|
835 |
|
Receivables from BHP Group |
|
|
22 |
|
|
|
5,526 |
|
|
|
12,424 |
|
|
|
15,871 |
|
Other financial assets |
|
|
17 |
|
|
|
- |
|
|
|
7 |
|
|
|
3 |
|
Inventories |
|
|
7 |
|
|
|
307 |
|
|
|
250 |
|
|
|
251 |
|
Current tax assets |
|
|
5 |
|
|
|
130 |
|
|
|
210 |
|
|
|
6 |
|
Other |
|
|
|
|
|
|
9 |
|
|
|
34 |
|
|
|
23 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current assets |
|
|
|
|
|
|
7,656 |
|
|
|
13,923 |
|
|
|
18,387 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-current assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trade and other receivables |
|
|
6 |
|
|
|
157 |
|
|
|
112 |
|
|
|
38 |
|
Other financial assets |
|
|
17 |
|
|
|
52 |
|
|
|
86 |
|
|
|
67 |
|
Property, plant and equipment |
|
|
8 |
|
|
|
11,854 |
|
|
|
11,787 |
|
|
|
10,628 |
|
Intangible assets |
|
|
11 |
|
|
|
78 |
|
|
|
110 |
|
|
|
104 |
|
Net investments and funding of equity accounted investments |
|
|
21 |
|
|
|
253 |
|
|
|
245 |
|
|
|
239 |
|
Deferred tax assets |
|
|
5 |
|
|
|
2,182 |
|
|
|
2,041 |
|
|
|
2,040 |
|
Other |
|
|
|
|
|
|
3 |
|
|
|
5 |
|
|
|
1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total non-current assets |
|
|
|
|
|
|
14,579 |
|
|
|
14,386 |
|
|
|
13,117 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets |
|
|
|
|
|
|
22,235 |
|
|
|
28,309 |
|
|
|
31,504 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trade and other payables |
|
|
13 |
|
|
|
919 |
|
|
|
771 |
|
|
|
929 |
|
Payables to BHP Group |
|
|
17, 22 |
|
|
|
2,001 |
|
|
|
6,533 |
|
|
|
6,520 |
|
Interest bearing liabilities |
|
|
9 |
|
|
|
35 |
|
|
|
61 |
|
|
|
17 |
|
Other financial liabilities |
|
|
|
|
|
|
9 |
|
|
|
6 |
|
|
|
1 |
|
Current tax payable |
|
|
5 |
|
|
|
280 |
|
|
|
292 |
|
|
|
465 |
|
Closure and rehabilitation provisions |
|
|
14 |
|
|
|
141 |
|
|
|
162 |
|
|
|
205 |
|
Other provisions |
|
|
15,18 |
|
|
|
315 |
|
|
|
274 |
|
|
|
277 |
|
Deferred income |
|
|
|
|
|
|
14 |
|
|
|
25 |
|
|
|
21 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current liabilities |
|
|
|
|
|
|
3,714 |
|
|
|
8,124 |
|
|
|
8,435 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-current liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-current tax payable |
|
|
5 |
|
|
|
14 |
|
|
|
- |
|
|
|
- |
|
Payables to BHP Group |
|
|
17, 22 |
|
|
|
10,347 |
|
|
|
10,347 |
|
|
|
14,340 |
|
Interest bearing liabilities |
|
|
9 |
|
|
|
234 |
|
|
|
322 |
|
|
|
- |
|
Closure and rehabilitation provisions |
|
|
14 |
|
|
|
3,816 |
|
|
|
3,433 |
|
|
|
2,095 |
|
Deferred tax liabilities |
|
|
5 |
|
|
|
610 |
|
|
|
1,028 |
|
|
|
1,244 |
|
Other provisions |
|
|
15, 18 |
|
|
|
344 |
|
|
|
276 |
|
|
|
368 |
|
Deferred income |
|
|
|
|
|
|
44 |
|
|
|
55 |
|
|
|
85 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total non-current liabilities |
|
|
|
|
|
|
15,409 |
|
|
|
15,461 |
|
|
|
18,132 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities |
|
|
|
|
|
|
19,123 |
|
|
|
23,585 |
|
|
|
26,567 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net assets |
|
|
|
|
|
|
3,112 |
|
|
|
4,724 |
|
|
|
4,937 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EQUITY |
|
|
|
|
|
|
3,112 |
|
|
|
4,724 |
|
|
|
4,937 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes form part of these financial statements.
3
BHP Petroleum Assets
Combined statement of cash flows for the years ended 30 June 2021, 2020 and 2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes |
|
|
2021 US$M |
|
|
2020 US$M |
|
|
Unaudited 2019 US$M |
|
Operating activities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit/(loss) before taxation |
|
|
|
|
|
|
(174 |
) |
|
|
304 |
|
|
|
1,750 |
|
Adjustments for: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortisation expense |
|
|
|
|
|
|
1,840 |
|
|
|
1,457 |
|
|
|
1,560 |
|
Impairments of property, plant and equipment and intangible assets |
|
|
|
|
|
|
127 |
|
|
|
11 |
|
|
|
21 |
|
Net finance costs |
|
|
|
|
|
|
408 |
|
|
|
356 |
|
|
|
637 |
|
Share of operating loss of equity accounted investments |
|
|
|
|
|
|
6 |
|
|
|
4 |
|
|
|
2 |
|
Other |
|
|
|
|
|
|
(187 |
) |
|
|
(141 |
) |
|
|
(223 |
) |
Changes in assets and liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trade and other receivables |
|
|
|
|
|
|
(298 |
) |
|
|
253 |
|
|
|
142 |
|
Inventories |
|
|
|
|
|
|
(42 |
) |
|
|
(1 |
) |
|
|
(1 |
) |
Trade and other payables |
|
|
|
|
|
|
52 |
|
|
|
(166 |
) |
|
|
17 |
|
Provisions and other assets and liabilities |
|
|
|
|
|
|
11 |
|
|
|
(152 |
) |
|
|
(212 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated from operations |
|
|
|
|
|
|
1,743 |
|
|
|
1,925 |
|
|
|
3,693 |
|
Dividends received |
|
|
|
|
|
|
25 |
|
|
|
20 |
|
|
|
17 |
|
Net interest paid |
|
|
|
|
|
|
(257 |
) |
|
|
(395 |
) |
|
|
(553 |
) |
Income taxes paid (including royalty taxes) |
|
|
|
|
|
|
(451 |
) |
|
|
(965 |
) |
|
|
(810 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net operating cash flows from Continuing operations |
|
|
|
|
|
|
1,060 |
|
|
|
585 |
|
|
|
2,347 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net operating cash flows from Discontinued operations |
|
|
24 |
|
|
|
- |
|
|
|
- |
|
|
|
474 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net operating cash flows |
|
|
|
|
|
|
1,060 |
|
|
|
585 |
|
|
|
2,821 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investing activities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchases of property, plant and equipment |
|
|
|
|
|
|
(994 |
) |
|
|
(909 |
) |
|
|
(645 |
) |
Exploration expenditure |
|
|
|
|
|
|
(26 |
) |
|
|
(169 |
) |
|
|
(297 |
) |
Investment in subsidiaries, operations and joint operations, net of cash |
|
|
|
|
|
|
(480 |
) |
|
|
- |
|
|
|
- |
|
Net investment and funding of equity accounted investments |
|
|
|
|
|
|
(25 |
) |
|
|
(22 |
) |
|
|
(6 |
) |
Other investing |
|
|
|
|
|
|
(34 |
) |
|
|
(11 |
) |
|
|
(4 |
) |
Proceeds from sale of assets |
|
|
|
|
|
|
39 |
|
|
|
78 |
|
|
|
8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net investing cash flows from Continuing operations |
|
|
|
|
|
|
(1,520 |
) |
|
|
(1,033 |
) |
|
|
(944 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net investing cash flows from Discontinued operations |
|
|
24 |
|
|
|
- |
|
|
|
- |
|
|
|
(443 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net investing cash flows |
|
|
|
|
|
|
(1,520 |
) |
|
|
(1,033 |
) |
|
|
(1,387 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financing activities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lease payments |
|
|
|
|
|
|
(38 |
) |
|
|
(39 |
) |
|
|
- |
|
Repayments of long-term borrowing to BHP Group |
|
|
|
|
|
|
(3,993 |
) |
|
|
(3,000 |
) |
|
|
- |
|
Net other financing with BHP Group |
|
|
|
|
|
|
4,941 |
|
|
|
2,432 |
|
|
|
(12,544 |
) |
Proceeds from issuance of shares to BHP Group |
|
|
|
|
|
|
- |
|
|
|
- |
|
|
|
2,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net financing cash flows from Continuing operations |
|
|
|
|
|
|
910 |
|
|
|
(607 |
) |
|
|
(10,544 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net financing cash flows from Discontinued operations |
|
|
24 |
|
|
|
- |
|
|
|
- |
|
|
|
(13 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net financing cash flows |
|
|
|
|
|
|
910 |
|
|
|
(607 |
) |
|
|
(10,557 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net increase/(decrease) in cash and cash equivalents from Continuing operations |
|
|
|
|
|
|
450 |
|
|
|
(1,055 |
) |
|
|
(9,141 |
) |
Net increase in cash and cash equivalents from Discontinued operations |
|
|
24 |
|
|
|
- |
|
|
|
- |
|
|
|
18 |
|
Proceeds from divestment of Onshore US, net of its cash |
|
|
|
|
|
|
- |
|
|
|
- |
|
|
|
10,427 |
|
Cash and cash equivalents, net of overdrafts at the beginning of the financial year |
|
|
|
|
|
|
325 |
|
|
|
1,381 |
|
|
|
77 |
|
Foreign currency exchange rate changes on cash and cash equivalents |
|
|
|
|
|
|
1 |
|
|
|
(1 |
) |
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents, net of overdrafts at the end of the financial year |
|
|
9 |
|
|
|
776 |
|
|
|
325 |
|
|
|
1,381 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes form part of these financial statements.
4
BHP Petroleum Assets
Combined statement of changes in equity for the years ended 30 June 2021, 2020 and 2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share capital (1) US$M |
|
|
Retained earnings US$M |
|
|
Foreign currency translation reserve US$M |
|
|
Equity attributable to Parent US$M |
|
|
Non- controlling interests US$M |
|
|
Total equity US$M |
|
Balance as at 1 July 2020 |
|
|
18,676 |
|
|
|
(13,998) |
|
|
|
46 |
|
|
|
4,724 |
|
|
|
- |
|
|
|
4,724 |
|
Total comprehensive loss |
|
|
- |
|
|
|
(360) |
|
|
|
- |
|
|
|
(360) |
|
|
|
- |
|
|
|
(360) |
|
Deemed distributions to BHP Group |
|
|
- |
|
|
|
(1,252) |
|
|
|
- |
|
|
|
(1,252) |
|
|
|
- |
|
|
|
(1,252) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as at 30 June 2021 |
|
|
18,676 |
|
|
|
(15,610) |
|
|
|
46 |
|
|
|
3,112 |
|
|
|
- |
|
|
|
3,112 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as at 1 July 2019 |
|
|
18,676 |
|
|
|
(13,784) |
|
|
|
45 |
|
|
|
4,937 |
|
|
|
- |
|
|
|
4,937 |
|
Total comprehensive income/(loss) |
|
|
- |
|
|
|
(189) |
|
|
|
1 |
|
|
|
(188) |
|
|
|
- |
|
|
|
(188) |
|
Deemed distributions to BHP Group |
|
|
- |
|
|
|
(25) |
|
|
|
- |
|
|
|
(25) |
|
|
|
- |
|
|
|
(25) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as at 30 June 2020 |
|
|
18,676 |
|
|
|
(13,998) |
|
|
|
46 |
|
|
|
4,724 |
|
|
|
- |
|
|
|
4,724 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unaudited |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as at 1 July 2018 |
|
|
16,676 |
|
|
|
(14,095) |
|
|
|
44 |
|
|
|
2,625 |
|
|
|
168 |
|
|
|
2,793 |
|
Total comprehensive income |
|
|
- |
|
|
|
311 |
|
|
|
1 |
|
|
|
312 |
|
|
|
7 |
|
|
|
319 |
|
Issuance of shares to BHP Group |
|
|
2,000 |
|
|
|
- |
|
|
|
- |
|
|
|
2,000 |
|
|
|
- |
|
|
|
2,000 |
|
Change in ownership in subsidiaries |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(175) |
|
|
|
(175) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as at 30 June 2019 |
|
|
18,676 |
|
|
|
(13,784) |
|
|
|
45 |
|
|
|
4,937 |
|
|
|
- |
|
|
|
4,937 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
Number of shares outstanding of BHP Petroleum International Pty Ltd (Parent of BHP Petroleum) for the reporting periods
ended 30 June 2021, 2020, 2019 were 18,876,136,568. On May 29, 2019, 2,890,800,028 ordinary shares were issued to BHP Group Limited for US$2,000 million in consideration. |
The accompanying notes form part of these financial statements.
5
BHP Petroleum Assets
Notes to the Financial Statements
1. |
Organisation and summary of significant accounting policies |
Organisation
BHP Petroleum Assets are a subset of entities wholly owned by BHP
Group Limited. The subset of entities primarily represents BHP Group Limiteds interests in its petroleum businesses, whose principal activities are the exploration, development and production of oil and gas. These petroleum businesses comprise
of oil and gas assets located in the United States (US) Gulf of Mexico, Australia, Trinidad and Tobago, Algeria and Mexico and appraisal and exploration options in Trinidad and Tobago, central and western US Gulf of Mexico, eastern Canada and
Barbados. The purpose of these non-statutory combined financial statements is to provide general purpose historical financial information of the BHP Petroleum Assets for inclusion in listing documents to be
issued by Woodside Petroleum Limited, which has entered into a share sale agreement to combine with BHP Petroleum Assets (Proposed Transaction).
These combined
financial statements include financial information that is limited to the legal entities carved out (BHP Petroleum) from BHP Group Limited, in connection with the Proposed Transaction. BHP Petroleum consists of BHP Petroleum International Pty Ltd
and the entities it controls, except for the following entities:
|
|
|
BHP Billiton Petroleum Great Britain Limited |
|
|
|
BHP Mineral Resources Inc. |
|
|
|
BHP Copper Inc. and its subsidiaries |
A
list of the subsidiaries included within BHP Petroleums combined financial statements is included in Note 23 Significant entities of BHP Petroleum.
BHP Petroleum International Pty Ltd, the Parent of BHP Petroleum, is a proprietary limited company domiciled in Western Australia, Australia. The registered office of
BHP Petroleum International Pty Ltd is 125 St Georges Terrace, Perth WA 6000.
Ultimate group company
BHP Group Limited, a company incorporated in the state of Victoria, Australia, is the ultimate Parent company. Copies of the ultimate Parent companys financial
statements are available from BHP Centre, 171 Collins Street, Melbourne Victoria 3000, Australia.
Basis of presentation
These combined financial statements present the results of BHP Petroleum, as at and for the years ended 30 June 2021, 2020 and 2019 (the reporting periods) and
comprise of:
|
|
|
the combined statement of profit or loss and other comprehensive income for the years then ended; |
|
|
|
the combined statement of financial position as at the years ended; |
|
|
|
the combined statement of cash flows for the years then ended; |
|
|
|
the combined statement of changes in equity for the years then ended and |
|
|
|
notes comprising a summary of significant accounting policies and other explanatory information. |
6
BHP Petroleum Assets
Notes to the Financial Statements
The financial information of BHP Petroleum has been extracted on a
carve-out basis from the accounting records of BHP Group for the purposes of presenting the combined financial position, combined results of operations and combined cash flows of BHP Petroleum. The
combined financial statements reflect assets, liabilities, revenues and expenses directly attributable to BHP Petroleum identified above. BHP Petroleum has adopted the same accounting policies as BHP Group, unless otherwise stated.
The combined financial statements as at and for the reporting periods:
|
|
|
are a combined general purpose financial report |
|
|
|
have been prepared in accordance with the requirements of the Australian Corporations Act 2001 and UK Companies Act 2006
|
|
|
|
were prepared in accordance with International Financial Reporting Standards (IFRS), as issued by the International
Accounting Standards Board (IASB) |
|
|
|
are prepared on a going concern basis |
|
|
|
measure items on the basis of historical cost principles, except for the following items: |
|
- |
derivative financial instruments and certain other financial assets and liabilities, which are carried at fair value
|
|
|
|
include significant accounting policies in the notes to the financial statements that summarise the recognition and
measurement basis used and are relevant to an understanding of the combined financial statements |
|
|
|
apply a presentation currency of US dollars, consistent with the predominant functional currency of BHP Petroleums
operations. However, some subsidiaries and joint arrangements have functional currencies other than US dollars |
|
|
|
round amounts presented to the nearest million dollars, unless otherwise stated |
|
|
|
adopt all new and amended standards and interpretations under IFRS issued by the relevant bodies (listed above) (refer to
Note 25 New and amended accounting standards and interpretations), that are mandatory for application in periods beginning on 1 July 2019. Those new and amended standards and interpretations did not require restatement of prior
period financial information |
|
|
|
early adopt amendments to IFRS 9 Financial Instruments (IFRS 9); IAS 39 Financial Instruments:
Recognition and Measurement (IAS 39); IFRS 7 Financial Instruments: Disclosures (IFRS 7) and IFRS 16 Leases (IFRS 16) in relation to Interest Rate Benchmark Reform (refer to Note 25 New and amended accounting
standards and interpretations) |
|
|
|
have not early adopted any other standards and interpretations that have been issued or amended but are not yet effective
|
The accounting policies are consistently applied by all entities included in BHP Petroleum.
Principles of combination
In preparing the combined financial statements, the
effects of all intragroup balances and transactions have been eliminated in accordance with the consolidation requirements of IFRS 10 Consolidated Financial Statements.
The combined financial statements of BHP Petroleum include the combination of entities controlled by BHP Petroleum International Pty Ltd, except for certain controlled
entities as identified above, which are excluded on the basis that they are outside the Proposed Transaction.
7
BHP Petroleum Assets
Notes to the Financial Statements
Control exists where BHP Petroleum:
|
|
|
is exposed to, or has rights to, variable returns from its involvement with the entity. |
|
|
|
has the ability to affect those returns through its power to direct the activities of the entity. |
|
|
|
has the ability to approve the operating and capital budget of an entity and the ability to appoint key management
personnel, which are decisions that demonstrate that BHP Petroleum has the existing rights to direct the relevant activities of an entity. |
Joint arrangements
BHP Petroleum undertakes a number of business activities
through joint arrangements, which exist when two or more parties have joint control. All of BHP Petroleums joint arrangements are classified as joint operations. A joint operation is an arrangement in which BHP Petroleum shares joint control,
primarily via contractual arrangements with other parties. In a joint operation, BHP Petroleum has rights to the assets and obligations for the liabilities relating to the arrangement. This includes situations where the parties benefit from the
joint activity through a share of the output, rather than by receiving a share of the results of trading. In relation to BHP Petroleums interest in a joint operation, BHP Petroleum recognises: its assets and liabilities, including its share of
any assets and liabilities held or incurred jointly; revenue from the sale of its share of the output and its share of any revenue generated from the sale of the output by the joint operation; and its expenses including its share of expenses
incurred jointly. All such amounts are measured in accordance with the terms of the arrangement, which is usually in proportion to BHP Petroleums interest in the joint operation.
Associates
BHP Petroleum accounts for investments in associates using the
equity accounting method. An entity is considered an associate where we are deemed to have significant influence but not control or joint control.
Significant
influence is presumed to exist where BHP Petroleum:
|
|
|
has over 20 per cent but less than 50 per cent of the voting rights of an entity, unless it can be clearly
demonstrated that this is not the case or |
|
|
|
holds less than 20 per cent of the voting rights of an entity; however, has the power to participate in the
financial and operating policy decisions affecting the entity. |
Foreign currencies
Transactions related to BHP Petroleums worldwide operations are conducted in a number of foreign currencies. The majority of the subsidiaries, joint arrangements
and associates within each of the operations have assessed US dollars as the functional currency, however, some subsidiaries and joint arrangements have functional currencies other than US dollars.
Transactions and monetary items denominated in foreign currencies are translated into US dollars as follows:
|
|
|
|
|
Foreign currency item |
|
|
|
Applicable exchange rate |
Transactions |
|
|
|
Date of underlying transaction |
Monetary assets and liabilities |
|
|
|
Period-end rate |
8
BHP Petroleum Assets
Notes to the Financial Statements
Foreign exchange gains and losses resulting from translation are recognised in the income statement, except for foreign
exchange gains or losses on foreign currency provisions for site closure and rehabilitation costs (which are capitalised in property, plant and equipment for operating sites).
On combination, the assets, liabilities, income and expenses of non-US dollar denominated functional currency entities are
translated into US dollars using the following applicable exchange rates:
|
|
|
|
|
Foreign currency amount |
|
|
|
Applicable exchange rate |
Income and expenses |
|
|
|
Date of underlying transaction |
Assets and liabilities |
|
|
|
Period-end rate |
Equity |
|
|
|
Historical rate |
Reserves |
|
|
|
Historical rate |
Foreign exchange differences resulting from translation are initially recognised in the foreign currency translation reserve and
subsequently transferred to the income statement on disposal of a foreign operation.
Significant accounting policies, judgements and estimates
BHP Petroleum has identified a number of accounting policies under which significant judgements, estimates and assumptions are made. All judgements, estimates and
assumptions are based on the most current facts and circumstances and are reassessed on an ongoing basis. Actual results in future reporting periods may differ for these estimates under different assumptions and conditions. Significant judgements
and key estimates and assumptions made in applying these accounting policies are embedded within Note 5 Income Tax, Note 8 Property, plant and equipment, Note 11 Intangible assets, Note 12 Impairment of non-current assets and Note 14 Closure and rehabilitation provisions.
Reserve estimates
Reserves are estimates of the amount of product that can be demonstrated to be able to be economically and legally extracted from BHP Petroleums properties. In
order to estimate reserves, assumptions are required about a range of technical and economic factors, including quantities, qualities, production techniques, recovery efficiency, production and transport costs, commodity supply and demand, commodity
prices and exchange rates.
Estimating the quantity and/or quality of reserves requires the size, shape and depth or oil and gas reservoirs to be determined by
analysing geological data, such as drilling samples and geophysical survey interpretations. Economic assumptions used to estimate reserves change from period-to-period
as additional technical and operational data is generated. This process may require complex and difficult geological judgements to interpret the data.
Reserve
impact on financial reporting
Estimates of reserves may change from
period-to-period as the economic assumptions used to estimate reserves change and additional geological data is generated during the course of operations. Changes in
reserves may affect BHP Petroleums financial results and financial position in a number of ways, including:
|
|
|
asset carrying values may be affected due to changes in estimated future production levels |
|
|
|
depreciation, depletion and amortisation charged in the income statement may change where such charges are determined on
the units of production basis, or where the useful economic lives of assets change |
9
BHP Petroleum Assets
Notes to the Financial Statements
|
|
|
closure and rehabilitation provisions may change where changes in estimated reserves affect expectations about the timing
or cost of these activities |
|
|
|
the carrying amount of deferred tax assets may change due to changes in estimates of the likely recovery of the tax
benefits |
Impact of Coronavirus Disease 2019 (COVID-19) Pandemic
BHP Petroleum continues to actively monitor the impact of the COVID-19 pandemic, including the impact on economic activity and
financial reporting. During FY2021, BHP Petroleum experienced lower commodity prices and market demand driven by travel restrictions and lockdowns. As the pandemic continues to progress and evolve, it is difficult to predict the full extent and
duration of resulting operational and economic impacts for BHP Petroleum, which are expected to impact a number of reporting periods. The ongoing uncertainty has also been considered in BHP Petroleums assessment of the appropriateness of
applying the going concern basis of preparation of the financial statements. BHP Petroleum has made an assessment of its ability to continue as a going concern over the period to 30 November 2022 (the going concern period) and believes that it
has sufficient financial resources to meet its obligations as they fall due throughout the going concern period. As such, the financial statements continue to be prepared on a going concern basis.
2. |
First time adoption of IFRS |
Management has given due consideration to the requirements of IFRS 1 First-time Adoption of International Financial Reporting Standards in preparing these
combined financial statements. The combined financial statements of BHP Petroleum are the first combined financial statements presented by BHP Petroleum. Entities included within the combined financial statements, for all periods presented, have
applied the recognition and measurement requirements of IFRS, in accordance with BHP Group accounting policies. As such, the preparation of these combined financial statements has not required the transition to IFRS recognition and measurement
requirements.
For this purpose, the date of BHP Petroleums first presentation of IFRS financial statements is determined to be 1 July 2018, being the
beginning of the earliest period for which BHP Petroleum presents full comparative information in these combined financial statements. BHP Petroleum has measured its assets and liabilities at the carrying amounts that are included in BHP
Groups consolidated financial statements, based on BHP Groups date of transition to IFRSs. With due regard to BHP Groups accounting policies and the requirements of IFRS 1, management has concluded that no adjustments were required
to comply with IFRS as issued by the IASB.
10
BHP Petroleum Assets
Notes to the Financial Statements
3. Revenue
The following table provides a summary of BHP Petroleums revenue by geographic location:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2021 US$M |
|
|
2020 US$M |
|
|
Unaudited 2019 US$M |
|
Australia |
|
|
1,133 |
|
|
|
1,080 |
|
|
|
1,340 |
|
North America |
|
|
1,285 |
|
|
|
1,108 |
|
|
|
1,903 |
|
United Kingdom |
|
|
28 |
|
|
|
40 |
|
|
|
77 |
|
Rest of Europe |
|
|
161 |
|
|
|
149 |
|
|
|
260 |
|
Japan |
|
|
407 |
|
|
|
567 |
|
|
|
887 |
|
South Korea |
|
|
16 |
|
|
|
- |
|
|
|
28 |
|
China |
|
|
74 |
|
|
|
73 |
|
|
|
95 |
|
Other Asia |
|
|
638 |
|
|
|
808 |
|
|
|
1,016 |
|
Rest of World |
|
|
167 |
|
|
|
172 |
|
|
|
261 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenue |
|
|
3,909 |
|
|
|
3,997 |
|
|
|
5,867 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following table provides a summary of BHP Petroleums revenue by asset: |
|
|
|
|
|
|
|
|
|
|
|
2021 US$M |
|
|
2020 US$M |
|
|
Unaudited 2019 US$M |
|
Australia Production Unit (1) |
|
|
327 |
|
|
|
361 |
|
|
|
507 |
|
Bass Strait |
|
|
1,066 |
|
|
|
1,102 |
|
|
|
1,237 |
|
North West Shelf |
|
|
893 |
|
|
|
1,076 |
|
|
|
1,657 |
|
Atlantis |
|
|
560 |
|
|
|
561 |
|
|
|
979 |
|
Shenzi |
|
|
417 |
|
|
|
277 |
|
|
|
540 |
|
Mad Dog |
|
|
231 |
|
|
|
216 |
|
|
|
319 |
|
Trinidad and Tobago |
|
|
204 |
|
|
|
191 |
|
|
|
287 |
|
Algeria |
|
|
164 |
|
|
|
159 |
|
|
|
258 |
|
Third-party products |
|
|
12 |
|
|
|
5 |
|
|
|
10 |
|
Other |
|
|
35 |
|
|
|
49 |
|
|
|
73 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenue |
|
|
3,909 |
|
|
|
3,997 |
|
|
|
5,867 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Australia Production Unit includes
Macedon, Pyrenees and Minerva (divested in December 2019). |
|
|
|
|
|
|
|
|
|
|
|
|
The following table provides a summary of BHP Petroleums revenue by product: |
|
|
|
|
|
|
|
|
|
|
|
2021 US$M |
|
|
2020 US$M |
|
|
Unaudited 2019 US$M |
|
Crude oil |
|
|
2,013 |
|
|
|
2,033 |
|
|
|
3,173 |
|
Gas |
|
|
1,659 |
|
|
|
1,754 |
|
|
|
2,399 |
|
Natural gas liquids |
|
|
212 |
|
|
|
198 |
|
|
|
252 |
|
Other |
|
|
25 |
|
|
|
12 |
|
|
|
43 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenue |
|
|
3,909 |
|
|
|
3,997 |
|
|
|
5,867 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue consists of revenue from contracts with customers of US$3,859 million (2020: US$3,952 million, 2019: US$5,817 million)
and other revenue of US$50 million (2020: US$45 million, 2019: US$50million).
11
BHP Petroleum Assets
Notes to the Financial Statements
Recognition and measurement
BHP Petroleum generates revenue primarily from the production and sale of crude oil, natural gas and natural gas liquids (NGLs). Revenue is recognised when or as control
of the promised goods or services passes to the customer. In most instances, control passes when the goods are delivered to a destination specified by the customer, typically on board the customers appointed vessel or at another contractually
agreed delivery point such as an outlet to storage facilities. Where applicable, revenue from the provision of services is recognised over time but does not represent a significant proportion of total revenue and is aggregated with the respective
asset and product revenue for disclosure purposes. The amount of revenue recognised reflects the consideration to which BHP Petroleum expects to be entitled in exchange for the goods or services. As at 30 June 2021, 2020 and 2019, no
significant estimates are required to determine revenue from contracts with customers.
Major customers
BHP Petroleum has two major customers which account for 18 per cent and 10 per cent of external revenue (2020: one customer, 13 per cent, 2019: one
customer, 15 per cent). BHP Petroleum does not believe the loss of either of these customers would have a material adverse effect on BHP Petroleum because the markets in which BHP Petroleum sells its production volumes are significant liquid markets
with alternative customers readily available for its production volumes.
Contract balances and asset recognition
Where BHP Petroleums sales are provisionally priced, the final price is generally known within the month of sale due to the typical pricing terms of BHP
Petroleums contracts with customers. The period between provisional pricing and final invoicing is typically less than 30 days.
BHP Petroleum applies the
practical expedient to not adjust the expected consideration for the effects of the time value of money if the period between the delivery and when the customer pays for the promised good or service is one year or less.
Performance obligations
For commodity sales contracts, each metric unit is a
separate performance obligation. Where BHP Petroleum has contracts with unfulfilled performance obligations at period-end, it is required to disclose the transaction price allocated to these performance
obligations. BHP Petroleum applies the practical expedient to not disclose this information for contracts with an expected duration of one year or less. Most of BHP Petroleums long-term contracts are priced on variable terms, based on quoted
index prices near the time of delivery and at times include fixed pricing components. Long-term contracts that include fixed pricing components, such as premiums and other charges, do not represent a significant portion of the total price. Any
estimate of the future transaction price would exclude estimated amounts of variable consideration. The amount of future consideration from fixed pricing components has not been disclosed, as it is not considered to be relevant or useful
information.
12
BHP Petroleum Assets
Notes to the Financial Statements
4. Expenses and other income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2021 US$M |
|
|
2020 US$M |
|
|
Unaudited 2019 US$M |
|
Employee benefits expense: |
|
|
|
|
|
|
|
|
|
|
|
|
Wages, salaries and redundancies |
|
|
381 |
|
|
|
388 |
|
|
|
416 |
|
Employee share awards |
|
|
36 |
|
|
|
39 |
|
|
|
45 |
|
Pension and other post-retirement obligations |
|
|
42 |
|
|
|
37 |
|
|
|
68 |
|
Less employee benefits expense classified as exploration and evaluation expenditure |
|
|
(93) |
|
|
|
(50) |
|
|
|
(70) |
|
Changes in inventories of finished goods |
|
|
(13) |
|
|
|
22 |
|
|
|
26 |
|
Raw materials and consumables used |
|
|
90 |
|
|
|
97 |
|
|
|
121 |
|
Freight and transportation |
|
|
112 |
|
|
|
117 |
|
|
|
150 |
|
External services |
|
|
620 |
|
|
|
505 |
|
|
|
387 |
|
Third-party commodity purchases |
|
|
11 |
|
|
|
6 |
|
|
|
11 |
|
Net foreign exchange losses |
|
|
17 |
|
|
|
14 |
|
|
|
(5) |
|
Government royalties paid and payable |
|
|
137 |
|
|
|
191 |
|
|
|
223 |
|
Exploration and evaluation and expenditure incurred and expensed in the period |
|
|
296 |
|
|
|
395 |
|
|
|
388 |
|
Depreciation and amortisation expense |
|
|
1,840 |
|
|
|
1,457 |
|
|
|
1,560 |
|
Fair value change on derivatives |
|
|
58 |
|
|
|
29 |
|
|
|
1 |
|
Net impairments: |
|
|
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment (1) |
|
|
108 |
|
|
|
11 |
|
|
|
7 |
|
Intangible assets |
|
|
19 |
|
|
|
- |
|
|
|
14 |
|
Other expenses |
|
|
138 |
|
|
|
132 |
|
|
|
168 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total expenses |
|
|
3,799 |
|
|
|
3,390 |
|
|
|
3,510 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividend income |
|
|
14 |
|
|
|
8 |
|
|
|
- |
|
Gain on sale of subsidiaries and operations (2)
|
|
|
56 |
|
|
|
- |
|
|
|
- |
|
Other income (3) |
|
|
60 |
|
|
|
49 |
|
|
|
32 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total other income |
|
|
130 |
|
|
|
57 |
|
|
|
32 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
Refer to Note 12 Impairment of non-current assets.
|
|
(2) |
Relates to the divestiture of our interest in Neptune, Gulf of Mexico. Refer to Note 8 Property, plant and
equipment and Note 14 Closure and rehabilitation provisions. |
|
(3) |
Other income is generally income earned from transactions outside the course of BHP Petroleums ordinary activities
and may include boat charter and tariff revenue. |
Recognition and measurement
Income is recognised when it is probable that the economic benefits associated with a transaction will flow to BHP Petroleum and can be reliably measured. Dividends are
recognised upon declaration.
13
BHP Petroleum Assets
Notes to the Financial Statements
5. Income tax
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2021 US$M |
|
|
2020 US$M |
|
|
Unaudited 2019 US$M |
|
Total taxation expense comprises: |
|
|
|
|
|
|
|
|
|
|
|
|
Current tax expense |
|
|
743 |
|
|
|
696 |
|
|
|
1,147 |
|
Deferred tax benefit |
|
|
(556) |
|
|
|
(214) |
|
|
|
(58) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
187 |
|
|
|
482 |
|
|
|
1,089 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2021 US$M |
|
|
2020 US$M |
|
|
Unaudited 2019 US$M |
|
Factors affecting income tax expense for the year |
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense differs to the standard rate of corporation tax as follows: |
|
|
|
|
|
|
|
|
|
|
|
|
(Loss)/profit before taxation |
|
|
(174) |
|
|
|
304 |
|
|
|
1,750 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax expense/(benefit) at Australian prima facie tax rate of 30 per cent |
|
|
(52) |
|
|
|
91 |
|
|
|
525 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-tax effected operating losses and capital gains |
|
|
272 |
|
|
|
209 |
|
|
|
289 |
|
Tax effect of loss from equity accounted investments, related impairments and expenses |
|
|
2 |
|
|
|
1 |
|
|
|
1 |
|
Investment and development allowance |
|
|
- |
|
|
|
- |
|
|
|
(1) |
|
Tax rate changes |
|
|
- |
|
|
|
(1) |
|
|
|
12 |
|
Amounts under/(over) provided in prior years |
|
|
46 |
|
|
|
50 |
|
|
|
(6) |
|
Recognition of previously unrecognised tax assets |
|
|
- |
|
|
|
(23) |
|
|
|
- |
|
Foreign exchange adjustments |
|
|
(61) |
|
|
|
(21) |
|
|
|
35 |
|
Impact of tax rates applicable outside of Australia |
|
|
77 |
|
|
|
99 |
|
|
|
60 |
|
Other |
|
|
(73) |
|
|
|
(5) |
|
|
|
10 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense |
|
|
211 |
|
|
|
400 |
|
|
|
925 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Royalty-related taxation (net of income tax benefit) |
|
|
(24) |
|
|
|
82 |
|
|
|
164 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total taxation expense |
|
|
187 |
|
|
|
482 |
|
|
|
1,089 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14
BHP Petroleum Assets
Notes to the Financial Statements
Income tax recognised in other comprehensive income is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2021 US$M |
|
|
2020 US$M |
|
|
Unaudited 2019 US$M |
|
Income tax effect of: |
|
|
|
|
|
|
|
|
|
|
|
|
Items that may be reclassified to the income statement: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax (charge)/credit relating to items that may be reclassified subsequently to the income
statement |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Items that will not be reclassified to the income statement: |
|
|
|
|
|
|
|
|
|
|
|
|
Remeasurement gains/(losses) on pension and medical schemes |
|
|
- |
|
|
|
3 |
|
|
|
2 |
|
Others |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax (charge)/credit relating to items that will not be reclassified to the income statement |
|
|
- |
|
|
|
3 |
|
|
|
2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total income tax (charge)/credit relating to components of other comprehensive income (1) |
|
|
- |
|
|
|
3 |
|
|
|
2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
Included within total income tax relating to components of other comprehensive income is US$ nil relating to deferred
taxes and US$ nil relating to current taxes (2020: US$3 million and US$ nil; 2019: US$2 million and US$ nil). |
Recognition and
measurement
Income taxes have been prepared on a separate return basis for the net income/(loss) from operations of BHP Petroleum based upon the estimated
applicable income tax rates for the jurisdictions in which BHP Petroleum is taxable, while also reflecting that, in historically filed returns, BHP Petroleum in Australia is part of the income tax consolidated group return parented by BHP Group
Limited.
Current tax payables and receivables are the amounts of tax payable or refundable on the basis of hypothetical, current year separate returns, adjusted to
reflect actual historical transactions undertaken in relation to the income tax consolidated group return parented by BHP Group Limited.
As such, the benefit of tax
losses generated by certain entities has not been recognised in BHP Petroleums Combined statement of profit or loss and comprehensive income or loss as these losses were transferred to BHP Group Limited in the year in which they were
generated. These losses, amounting to US$83 million (2020:US$143 million, 2019:US$205 million) would have been utilised by BHP Petroleum, and recognised as a credit in profit and loss, had BHP Petroleum operated as a hypothetical tax
consolidated group.
Deferred taxes are provided on temporary differences and on any carry forward losses or unused credits that could be claimed on hypothetical
returns and the recoverability of recognised and unrecognised deferred taxes is assessed on the basis of projected separate-return results.
Taxation on the
profit/(loss) for the year comprises of current and deferred tax. Taxation is recognised in the income statement except to the extent that it relates to items recognised directly in equity or other comprehensive income, in which case the tax effect
is also recognised in equity or other comprehensive income.
Current tax
Current tax is the expected tax on the taxable income for the year, using tax rates and laws enacted or substantively enacted at the reporting date and any adjustments to
tax payable in respect of previous years.
15
BHP Petroleum Assets
Notes to the Financial Statements
Deferred tax
Deferred tax is
provided in full, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. Deferred tax assets are recognised to the extent that it is probable that future taxable
profits will be available against which the temporary differences can be utilised.
Deferred tax is not recognised for temporary differences relating to:
|
● |
|
initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither
accounting nor taxable profit |
|
● |
|
investment in subsidiaries, associates and jointly controlled entities where BHP Petroleum is able to control the timing of
the reversal of the temporary difference and it is probable that they will not reverse in the foreseeable future. |
Deferred tax is measured at the
tax rates that are expected to be applied when the asset is realised or the liability is settled, based on the laws that have been enacted or substantively enacted at the reporting date.
Current and deferred tax assets and liabilities are offset when BHP Petroleum has a legally enforceable right to offset and when the tax balances are related to taxes
levied by the same tax authority and BHP Petroleum intends to settle on a net basis or realise the asset and settle the liability simultaneously.
Royalty-related
taxation
Royalties and resource rent taxes are treated as taxation arrangements (impacting income tax expense/(benefit)) when they are imposed under government
authority and the amount payable is calculated by reference to revenue derived (net of any allowable deductions) after adjustment for temporary differences. Obligations arising from royalty arrangements that do not satisfy these criteria are
recognised as current liabilities and included in expenses.
Uncertain tax and royalty matters
BHP Petroleum operates across many tax jurisdictions. Application of tax law can be complex and requires judgement to assess risk and estimate outcomes. The evaluation of
tax risks considers both amended assessments received and potential sources of challenge from tax authorities. The status of proceedings for these matters will impact the ability to determine the potential exposure and in some cases, it may not be
possible to determine a range of possible outcomes or a reliable estimate of the potential exposure.
BHP Petroleum has unresolved tax and royalty matters for which
the timing of resolution and potential economic outflow are uncertain. Tax and royalty matters with uncertain outcomes arise in the normal course of business and occur due to changes in tax law, changes in interpretation of tax law, periodic
challenges and disagreements with tax authorities and legal proceedings.
Tax and royalty obligations assessed as having probable future economic outflows capable of
reliable measurement are provided for in the balance sheet. Matters with possible economic outflow and/or presently incapable of being measured reliably are contingent liabilities and disclosed in Note 16 Contingent liabilities.
Key judgements and estimates
Income tax classification
Judgements: BHP Petroleums accounting policy for taxation, including royalty-related taxation, requires managements judgement as to the types of
arrangements considered to be a tax on income in contrast to an operating cost.
16
BHP Petroleum Assets
Notes to the Financial Statements
Deferred tax
Judgements: Judgement is required to determine the amount of deferred tax assets that are recognised based on the likely timing and the level of future taxable
profits.
Estimates: BHP Petroleum assesses the recoverability of recognised and unrecognised deferred taxes, on a consistent basis. Estimates and assumptions
relating to projected earnings and cash flows as applied in BHP Petroleums impairment process are used for operating assets.
Uncertain tax matters
Judgements: Management applies judgements about the application of income tax legislation and its interaction with income tax accounting principles. These
judgements are subject to risk and uncertainty, hence there is a possibility that changes in circumstances will alter expectations, which may impact the amount of tax assets and tax liabilities, including deferred tax, recognised on the balance
sheet and the amount of other tax losses and temporary differences not yet recognised.
Where the final tax outcomes are different from the amounts that were
initially recorded, these differences impact the current and deferred tax provisions in the period in which the determination is made.
Measurement of uncertain tax
and royalty matters considers a range of possible outcomes, including assessments received from tax authorities. Where management is of the view that potential liabilities have a low probability of crystallising, or it is not possible to quantify
them reliably, they are disclosed as contingent liabilities (refer to Note 16 Contingent liabilities).
The movement for
the year in BHP Petroleums net deferred tax positions is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2021 US$M |
|
|
2020 US$M |
|
|
Unaudited 2019 US$M |
|
Net deferred tax (liability/asset) |
|
|
|
|
|
|
|
|
|
|
|
|
At the beginning of the financial year |
|
|
1,013 |
|
|
|
796 |
|
|
|
736 |
|
Income tax credit recorded in the income statement |
|
|
556 |
|
|
|
214 |
|
|
|
58 |
|
Income tax credit recorded directly in equity |
|
|
3 |
|
|
|
3 |
|
|
|
2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At the end of the financial year |
|
|
1,572 |
|
|
|
1,013 |
|
|
|
796 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
17
BHP Petroleum Assets
Notes to the Financial Statements
The composition of BHP Petroleums net deferred tax assets and liabilities recognised in the balance sheet and the
deferred tax expense charged/(credited) to the income statement is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred tax assets |
|
|
Deferred tax liabilities |
|
|
Charged/(credited)
to the income statement |
|
|
|
|
|
|
|
|
|
|
|
|
|
2021 US$M |
|
|
2020 US$M |
|
|
Unaudited 2019 US$M |
|
|
2021 US$M |
|
|
2020 US$M |
|
|
Unaudited, 2019 US$M |
|
|
2021 US$M |
|
|
2020 US$M |
|
|
Unaudited 2019 US$M |
|
Type of temporary difference |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation |
|
|
(1,024) |
|
|
|
(1,054) |
|
|
|
(629) |
|
|
|
(66) |
|
|
|
(105) |
|
|
|
(119) |
|
|
|
(69) |
|
|
|
411 |
|
|
|
(11) |
|
Exploration expenditure |
|
|
32 |
|
|
|
37 |
|
|
|
43 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
5 |
|
|
|
6 |
|
|
|
7 |
|
Employee benefits |
|
|
63 |
|
|
|
63 |
|
|
|
59 |
|
|
|
- |
|
|
|
- |
|
|
|
1 |
|
|
|
- |
|
|
|
- |
|
|
|
1 |
|
Closure and rehabilitation |
|
|
1,036 |
|
|
|
967 |
|
|
|
604 |
|
|
|
(18) |
|
|
|
- |
|
|
|
- |
|
|
|
(51) |
|
|
|
(363) |
|
|
|
(78) |
|
Resource rent tax |
|
|
292 |
|
|
|
363 |
|
|
|
431 |
|
|
|
(526) |
|
|
|
(922) |
|
|
|
(1,123) |
|
|
|
(322) |
|
|
|
(133) |
|
|
|
(168) |
|
Other provisions |
|
|
65 |
|
|
|
55 |
|
|
|
49 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(10) |
|
|
|
(6) |
|
|
|
(20) |
|
Deferred income |
|
|
7 |
|
|
|
8 |
|
|
|
9 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
1 |
|
|
|
1 |
|
|
|
(6) |
|
Foreign exchange gains and losses |
|
|
3 |
|
|
|
1 |
|
|
|
1 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(2) |
|
|
|
- |
|
|
|
(1) |
|
Tax losses |
|
|
1,667 |
|
|
|
1,541 |
|
|
|
1,421 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(126) |
|
|
|
(120) |
|
|
|
156 |
|
Lease liability |
|
|
55 |
|
|
|
79 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
24 |
|
|
|
(79) |
|
|
|
- |
|
Other |
|
|
(14) |
|
|
|
(19) |
|
|
|
52 |
|
|
|
- |
|
|
|
(1) |
|
|
|
(3) |
|
|
|
(6) |
|
|
|
69 |
|
|
|
62 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
2,182 |
|
|
|
2,041 |
|
|
|
2,040 |
|
|
|
(610) |
|
|
|
(1,028) |
|
|
|
(1,244) |
|
|
|
(556) |
|
|
|
(214) |
|
|
|
(58) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The amount of deferred tax assets dependent on future taxable profits not arising from the reversal of existing deferred tax liabilities
and which relate to tax jurisdictions where the taxable entity has suffered a loss in the current or preceding year, was US$ nil at 30 June 2021 (2020: US$ nil, 2019: US$1,250 million). For operating assets, BHP Petroleum assesses the
recoverability of these deferred tax assets using estimates and assumptions relating to projected earnings and cash flows as applied in BHP Petroleum impairment process for associated operations.
18
BHP Petroleum Assets
Notes to the Financial Statements
The composition of BHP Petroleums unrecognised deferred tax assets and liabilities is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2021 US$M |
|
|
2020 US$M |
|
|
Unaudited 2019 US$M |
|
Unrecognised deferred tax assets |
|
|
|
|
|
|
|
|
|
|
|
|
Tax losses and tax credits (1) |
|
|
1,078 |
|
|
|
1,219 |
|
|
|
1,145 |
|
Deductible temporary differences relating to PRRT (2)
|
|
|
2,402 |
|
|
|
2,079 |
|
|
|
2,197 |
|
Petroleum rights (3) |
|
|
566 |
|
|
|
552 |
|
|
|
545 |
|
Other deductible temporary differences (4) |
|
|
419 |
|
|
|
315 |
|
|
|
398 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total unrecognised deferred tax assets |
|
|
4,465 |
|
|
|
4,165 |
|
|
|
4,285 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrecognised deferred tax liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
Future taxable temporary differences relating to unrecognised deferred tax asset for PRRT (2) |
|
|
720 |
|
|
|
624 |
|
|
|
659 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total unrecognised deferred tax liabilities |
|
|
720 |
|
|
|
624 |
|
|
|
659 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
At 30 June 2021, BHP Petroleum had income and capital tax losses with a tax benefit of US$768 million (2020:
US$890 million, 2019: US$823 million) and tax credits of US$310 million (2020: US$329 million, 2019: US$321 million), which are not recognised as deferred tax assets, because it is not probable that future taxable profits or capital
gains will be available against which BHP Petroleum can utilise the benefits. |
|
(2) |
BHP Group had unrecognised deferred tax assets relating to Australian Petroleum Resource Rent Tax (PRRT). Recognition of a
deferred tax asset for PRRT depends on benefits expected to be obtained from the deduction against PRRT liabilities. As PRRT payments are deductible for income tax purposes, to the extent these PRRT deferred tax assets are recognised this would give
rise to a corresponding deferred tax liability for income tax (presented as the future taxable temporary differences relating to the unrecognised PRRT deferred tax assets). |
|
(3) |
BHP Petroleum had deductible temporary differences relating to mineral rights for which deferred tax assets had not been
recognised because it is not probable that future capital. |
|
(4) |
BHP Petroleum had other deductible temporary differences for which deferred tax assets had not been recognised because it
is not probable that future tax profits will be available against which BHP Petroleum can utilise the benefits. |
|
|
The deductible temporary differences do not expire under current tax legislation. |
|
|
|
|
|
|
|
|
|
|
|
|
|
Year of Expiry |
|
2021 US$M |
|
|
2020 US$M |
|
|
Unaudited 2019 US$M |
|
Income tax losses |
|
|
|
|
|
|
|
|
|
|
|
|
Not later than one year |
|
|
12 |
|
|
|
474 |
|
|
|
359 |
|
Later than one year and not later than two years |
|
|
3 |
|
|
|
239 |
|
|
|
442 |
|
Later than two years and not later than five years |
|
|
46 |
|
|
|
2,475 |
|
|
|
2,713 |
|
Later than five years and not later than ten years |
|
|
1,339 |
|
|
|
600 |
|
|
|
455 |
|
Later than ten years and not later than twenty years |
|
|
1,787 |
|
|
|
2,373 |
|
|
|
2,267 |
|
Unlimited |
|
|
824 |
|
|
|
757 |
|
|
|
653 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,011 |
|
|
|
6,918 |
|
|
|
6,889 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital tax losses |
|
|
|
|
|
|
|
|
|
|
|
|
Not later than one year |
|
|
- |
|
|
|
- |
|
|
|
- |
|
Later than two years and not later than five years |
|
|
- |
|
|
|
- |
|
|
|
- |
|
Unlimited |
|
|
1 |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total capital tax losses |
|
|
1 |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross amount of tax losses not recognised |
|
|
4,012 |
|
|
|
6,918 |
|
|
|
6,889 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax effect of total losses not recognised |
|
|
768 |
|
|
|
892 |
|
|
|
823 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
19
BHP Petroleum Assets
Notes to the Financial Statements
6. Trade and other receivables
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2021 US$M |
|
|
2020 US$M |
|
|
Unaudited 2019 US$M |
|
Trade receivables |
|
|
358 |
|
|
|
185 |
|
|
|
392 |
|
Joint operations partner receivables (1) |
|
|
384 |
|
|
|
257 |
|
|
|
240 |
|
Value-added tax (VAT) and other tax related receivables |
|
|
262 |
|
|
|
282 |
|
|
|
238 |
|
Other receivables |
|
|
61 |
|
|
|
61 |
|
|
|
3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total trade and other receivables |
|
|
1,065 |
|
|
|
785 |
|
|
|
873 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprising: |
|
|
|
|
|
|
|
|
|
|
|
|
Current |
|
|
908 |
|
|
|
673 |
|
|
|
835 |
|
Non-current |
|
|
157 |
|
|
|
112 |
|
|
|
38 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
Joint operations partner receivables include production underlift positions and receivables for joint operations cash
float arrangements. |
Recognition and measurement
Trade receivables are recognised initially at their transaction price or, for those receivables containing a significant financing component, at fair
value. Trade receivables are subsequently measured at amortised cost using the effective interest method, less an allowance for impairment, except for provisionally priced receivables (where applicable) which are subsequently measured at fair value
through the income statement under IFRS 9 Financial Instruments.
The collectability of trade receivables is assessed on an ongoing basis. At the
reporting date, specific allowances are made for any expected credit losses based on a review of all outstanding amounts at reporting period-end. Individual receivables are written off when management deems
them unrecoverable. The net carrying amount of trade and other receivables approximates their fair values.
Credit risk
Trade receivables generally have terms of less than 30 days. BHP Petroleum has no material concentration of credit risk with any single counterparty and are not
dominantly exposed to any individual industry.
Credit risk can arise from the non-performance by counterparties of their
contractual financial obligations towards BHP Petroleum. To manage credit risk, BHP Petroleum maintains procedures covering the application for credit approvals, granting and renewal of counterparty limits, proactive monitoring of exposures against
these limits and requirements triggering secured payment terms. As part of these processes, the credit exposures with all counterparties are regularly monitored and assessed on a timely basis. The credit quality of customers is reviewed and the
solvency of each debtor and their ability to pay the receivable is considered in assessing receivables for impairment.
The ten largest customers represented
66 per cent (2020: 59 per cent, 2019: 51 per cent) of total credit risk exposures managed by BHP Petroleum.
Receivables are deemed to be past due or
impaired in accordance with our terms and conditions. These terms and conditions are determined on a case-by-case basis with reference to the customers credit
quality, payment performance and prevailing market conditions. As at 30 June 2021, 30 June 2020 and 30 June 2019 no trade receivables were past due.
20
BHP Petroleum Assets
Notes to the Financial Statements
The assessment of recoverability of trade receivables at 30 June 2021 has considered the impacts of COVID-19 and no material recoverability issues have been identified. As COVID-19 continues to impact key markets in Australia, United States, Europe and Asia, BHP Petroleum
continues to perform enhanced credit monitoring of commercial counterparties.
At 30 June 2021 and 2020, provisions for expected credit losses were not
significant.
7. Inventories
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2021 US$M |
|
|
2020 US$M |
|
|
Unaudited, 2019 US$M |
|
|
Definitions |
Raw materials and consumables |
|
|
271 |
|
|
|
226 |
|
|
|
206 |
|
|
Spares, consumables and other supplies yet to be utilised in the production process or in the rendering of services. |
Finished goods |
|
|
36 |
|
|
|
24 |
|
|
|
45
|
|
|
Commodities ready for sale and not requiring further processing. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total inventories |
|
|
307 |
|
|
|
250 |
|
|
|
251 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Recognition and measurement
Finished goods
inventories primarily represent crude oil in storage. Regardless of the type of inventory and its stage in the production process, inventories are valued at the lower of cost and net realisable value. Cost is determined primarily on the basis of
average costs. For processed inventories, cost is derived on an absorption costing basis. Cost comprises costs of purchasing raw materials and costs of production, including attributable manufacturing overheads taking into consideration normal
operating capacity. Inventory quantities are derived through flow rate or tank volume measurement and the composition is derived via sample analysis.
21
BHP Petroleum Assets
Notes to the Financial Statements
8. Property, plant and equipment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Land and buildings US$M |
|
|
Plant and equipment US$M |
|
|
Other mineral assets US$M |
|
|
Assets under construction US$M |
|
|
Exploration and evaluation US$M |
|
|
Total US$M |
|
Net book value - 30 June 2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At the beginning of the financial year |
|
|
257 |
|
|
|
8,268 |
|
|
|
133 |
|
|
|
2,040 |
|
|
|
1,089 |
|
|
|
11,787 |
|
Additions (1)
|
|
|
1 |
|
|
|
294 |
|
|
|
- |
|
|
|
1,133 |
|
|
|
7 |
|
|
|
1,435 |
|
Acquisitions of subsidiaries & operations (2) |
|
|
- |
|
|
|
151 |
|
|
|
491 |
|
|
|
- |
|
|
|
- |
|
|
|
642 |
|
Depreciation for the year |
|
|
(27) |
|
|
|
(1,719) |
|
|
|
(62) |
|
|
|
- |
|
|
|
- |
|
|
|
(1,808) |
|
Impairments for the year (3)
|
|
|
(40) |
|
|
|
(2) |
|
|
|
- |
|
|
|
- |
|
|
|
(66) |
|
|
|
(108) |
|
Divestment and demerger of subsidiaries and operations (4) |
|
|
- |
|
|
|
(14) |
|
|
|
- |
|
|
|
(2) |
|
|
|
- |
|
|
|
(16) |
|
Transfers and other movements |
|
|
- |
|
|
|
675 |
|
|
|
- |
|
|
|
(753) |
|
|
|
- |
|
|
|
(78) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At the end of the financial year
(5) |
|
|
191 |
|
|
|
7,653 |
|
|
|
562 |
|
|
|
2,418 |
|
|
|
1,030 |
|
|
|
11,854 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- Cost |
|
|
463 |
|
|
|
29,358 |
|
|
|
1,090 |
|
|
|
2,418 |
|
|
|
1,086 |
|
|
|
34,415 |
|
- Accumulated depreciation and impairments |
|
|
(272) |
|
|
|
(21,705) |
|
|
|
(528) |
|
|
|
- |
|
|
|
(56) |
|
|
|
(22,561) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net book value - 30 June 2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At the beginning of the financial year |
|
|
101 |
|
|
|
8,103 |
|
|
|
144 |
|
|
|
1,240 |
|
|
|
1,040 |
|
|
|
10,628 |
|
Impact of adopting IFRS 16 (7)
|
|
|
233 |
|
|
|
128 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
361 |
|
Additions (1)
|
|
|
4 |
|
|
|
1,246 |
|
|
|
- |
|
|
|
1,008 |
|
|
|
120 |
|
|
|
2,378 |
|
Depreciation for the year |
|
|
(32) |
|
|
|
(1,368) |
|
|
|
(19) |
|
|
|
- |
|
|
|
- |
|
|
|
(1,419) |
|
Impairments for the year (3)
|
|
|
- |
|
|
|
(11) |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(11) |
|
Disposals (6)
|
|
|
- |
|
|
|
(8) |
|
|
|
- |
|
|
|
- |
|
|
|
(65) |
|
|
|
(73) |
|
Transfers and other movements |
|
|
(49) |
|
|
|
178 |
|
|
|
8 |
|
|
|
(208) |
|
|
|
(6) |
|
|
|
(77) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At the end of the financial year
(5) |
|
|
257 |
|
|
|
8,268 |
|
|
|
133 |
|
|
|
2,040 |
|
|
|
1,089 |
|
|
|
11,787 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- Cost |
|
|
462 |
|
|
|
28,965 |
|
|
|
600 |
|
|
|
2,040 |
|
|
|
1,089 |
|
|
|
33,156 |
|
- Accumulated depreciation and impairments |
|
|
(205) |
|
|
|
(20,697) |
|
|
|
(467) |
|
|
|
- |
|
|
|
- |
|
|
|
(21,369) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unaudited |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net book value - 30 June 2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At the beginning of the financial year |
|
|
151 |
|
|
|
8,985 |
|
|
|
167 |
|
|
|
903 |
|
|
|
790 |
|
|
|
10,996 |
|
Additions (1)
|
|
|
- |
|
|
|
292 |
|
|
|
- |
|
|
|
978 |
|
|
|
296 |
|
|
|
1,566 |
|
Depreciation for the year |
|
|
(50) |
|
|
|
(1,510) |
|
|
|
(23) |
|
|
|
- |
|
|
|
- |
|
|
|
(1,583) |
|
Impairments for the year (3) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(7) |
|
|
|
(7) |
|
Disposals (6)
|
|
|
- |
|
|
|
(15) |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(15) |
|
Transfers and other movements |
|
|
- |
|
|
|
351 |
|
|
|
- |
|
|
|
(641) |
|
|
|
(39) |
|
|
|
(329) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At the end of the financial year (5) |
|
|
101 |
|
|
|
8,103 |
|
|
|
144 |
|
|
|
1,240 |
|
|
|
1,040 |
|
|
|
10,628 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- Cost |
|
|
274 |
|
|
|
27,791 |
|
|
|
592 |
|
|
|
1,240 |
|
|
|
1,044 |
|
|
|
30,941 |
|
- Accumulated depreciation and impairments |
|
|
(173) |
|
|
|
(19,688) |
|
|
|
(448) |
|
|
|
- |
|
|
|
(4) |
|
|
|
(20,313) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
Includes change in estimates, impact of discount rate change and net foreign exchange gains/(losses) related to the
closure and rehabilitation provisions for operating sites. Refer to Note 14 Closure and rehabilitation provisions. |
|
(2) |
Relates to the acquisition of an additional 28 per cent working interest in Shenzi. Refer to Note 20
Interest in joint operations. |
|
(3) |
Refer to Note 12 Impairment of non-current assets for information
on impairments. |
22
BHP Petroleum Assets
Notes to the Financial Statements
|
(4) |
Relates to the divestment of our 35 per cent interest in the Gulf of Mexico Neptune field, which closed in May 2021.
The transfer resulted in a book gain on disposal of US$56 million. The book gain was largely the result of transferring the Neptune closure obligation liability to the acquirer. |
|
(5) |
Includes the carrying value of BHP Petroleums
right-of-use assets relating to land and buildings and plant and equipment of US$131 million (2020: US$263 million, 2019: US$ nil). Refer to Note 9
Interest bearing liabilities for the movement of the right-of-use assets. |
|
(6) |
US$65 million relates to the divestment of BHP Petroleums 50 per cent interest in the Murphy Oil operated
Samurai field in the Gulf of Mexico; which closed in November 2019. |
|
(7) |
Refer to Note 25 New and amended accounting standards and interpretations. |
Recognition and measurement
Property, plant and equipment is recorded at cost
less accumulated depreciation and impairment charges. Cost is the fair value of consideration given to acquire the asset at the time of its acquisition or construction and includes the direct costs of bringing the asset to the location and the
condition necessary for operation and the estimated future costs of closure and rehabilitation of the facility.
Right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses and adjusted for any remeasurement of the lease liabilities.
Exploration and evaluation
Exploration costs are incurred to discover
petroleum resources. Evaluation costs are incurred to assess the technical feasibility and commercial viability of resources found.
Exploration and evaluation
expenditure is charged to the income statement as incurred, except in the following circumstances in which case the expenditure may be capitalised:
|
● |
|
the exploration and evaluation activity is within an area of interest for which it is expected that the expenditure will be
recouped by future exploitation or sale, or |
|
● |
|
the exploration and evaluation activity has not reached a stage that permits a reasonable assessment of the existence of
commercially recoverable reserves. |
A regular review of each area of interest is undertaken to determine the appropriateness of continuing to carry
forward costs in relation to that area. Capitalised costs are only carried forward to the extent that they are expected to be recovered through the successful exploitation of the area of interest or alternatively by its sale. To the extent that
capitalised expenditure is no longer expected to be recovered, it is charged to the income statement.
Key judgements and estimates
Judgements: Exploration and evaluation expenditure results in certain items of expenditure being capitalised for an area of interest where a judgement is made that
it is likely to be recoverable by future exploitation or sale, or where the activities are judged not to have reached a stage that permits a reasonable assessment of the existence of reserves.
Estimates: Management makes certain estimates and assumptions as to future events and circumstances, in particular when making a quantitative assessment of
whether an economically viable extraction operation can be established. These estimates and assumptions may change as new information becomes available. If, after having capitalised the expenditure under the policy, new information suggests that
recovery of the expenditure is unlikely, the relevant capitalised amount is charged to the income statement.
Development expenditure
When proven reserves are determined and development is sanctioned, capitalised exploration and evaluation expenditure is reclassified as assets under construction within
property, plant and equipment. All subsequent development expenditure is capitalised and classified as assets under construction, provided commercial viability conditions continue to be satisfied.
23
BHP Petroleum Assets
Notes to the Financial Statements
BHP Petroleum may use borrowed funds to finance the acquisition and development of assets and operations. Finance costs
are expensed as incurred, except where they relate to the financing of construction or development of qualifying assets. Borrowing costs directly attributable to acquiring or constructing a qualifying asset are capitalised during the development
phase. Development expenditure is net of proceeds from the saleable material extracted during the development phase. On completion of development, all assets included in assets under construction are reclassified as either plant and equipment or
other mineral assets and depreciation commences.
Key judgements and estimates
Judgements: Development activities commence after project sanctioning by the appropriate level of management. Judgement is applied by management in determining
when a project is economically viable.
Estimates: In determining whether a project is economically viable, management is required to make certain estimates
and assumptions as to future events and circumstances, including reserve estimates, existence of an accessible market and forecast prices and cash flows. Estimates and assumptions may change as new information becomes available. If, after having
commenced the development activity, new information suggests that a development asset is impaired, the appropriate amount is charged to the income statement.
Depreciation
Depreciation of assets, other than land, assets under
construction and capitalised exploration and evaluation that are not depreciated, is calculated using either the straight-line (SL) method or units of production (UoP) method, net of residual values, over the estimated useful lives of specific
assets. The depreciation method and rates applied to specific assets reflect the pattern in which the assets benefits are expected to be used by BHP Petroleum. The proved reserves for petroleum assets are used to determine UoP depreciation
unless doing so results in depreciation charges that do not reflect the assets useful life. Where this occurs, alternative approaches to determining reserves are applied, such as using managements expectations of future oil and gas
prices rather than yearly average prices, to provide a phasing of periodic depreciation charges that better reflects the assets expected useful life.
Where
assets are dedicated to a petroleum lease, the useful lives below are subject to the lesser of the asset categorys useful life and the life of the petroleum lease, unless those assets are readily transferable to another lease.
Key judgements and estimates
The determination of useful lives, residual
values and depreciation methods involves estimates and assumptions and is reviewed annually. Any changes to useful lives or any other estimates or assumptions may affect prospective depreciation rates and asset carrying values. The table below
summarises the principal depreciation methods and rates applied to major asset categories by BHP Petroleum.
|
|
|
|
|
|
|
|
|
Category |
|
Buildings |
|
Plant and
equipment |
|
Petroleum
interests |
|
Capitalised
exploration, evaluation and
development expenditure |
Typical depreciation methodology |
|
SL |
|
UoP |
|
UoP |
|
UoP |
Depreciation rate |
|
15 50 years |
|
Based on the rate of depletion of
reserves |
|
Based on the rate of depletion of reserves |
|
Based on the rate of depletion of
reserves |
24
BHP Petroleum Assets
Notes to the Financial Statements
Commitments
BHP
Petroleums commitments for capital expenditure were US$754 million at 30 June 2021 (2020: US$971 million, 2019: US$1,201 million). BHP Petroleums commitments related to leases are included in Note 10 Leases.
9. Interest bearing liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current |
|
|
Non-current |
|
|
|
2021 US$M |
|
|
2020 US$M |
|
|
Unaudited 2019 US$M |
|
|
2021 US$M |
|
|
2020 US$M |
|
|
Unaudited 2019 US$M |
|
Lease liabilities |
|
|
35 |
|
|
|
61 |
|
|
|
- |
|
|
|
234 |
|
|
|
322 |
|
|
|
- |
|
Bank overdrafts |
|
|
- |
|
|
|
- |
|
|
|
17 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total interest bearing liabilities |
|
|
35 |
|
|
|
61 |
|
|
|
17 |
|
|
|
234 |
|
|
|
322 |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Further information on BHP Petroleums leases is provided in Note 10 Leases.
Cash is disclosed in the cash flow statement net of bank overdrafts and interest bearing liabilities at call.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2021 US$M |
|
|
2020 US$M |
|
|
Unaudited 2019 US$M |
|
Total cash and cash equivalents |
|
|
776 |
|
|
|
325 |
|
|
|
1,398 |
|
Bank overdrafts |
|
|
- |
|
|
|
- |
|
|
|
(17 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total cash and cash equivalents, net of overdrafts |
|
|
776 |
|
|
|
325 |
|
|
|
1,381 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25
BHP Petroleum Assets
Notes to the Financial Statements
10. Leases
BHP Petroleum
applied IFRS 16 Leases from 1 July 2019. Details on the transition to IFRS 16 are included in Note 25 New and amended accounting standards and interpretations.
Movements in BHP Petroleums lease liabilities during the year are as follows:
|
|
|
|
|
|
|
|
|
|
|
2021 US$M |
|
|
2020 US$M |
|
At the beginning of the financial year |
|
|
383 |
|
|
|
- |
|
IFRS 16 transition (1)
|
|
|
- |
|
|
|
438 |
|
Additions |
|
|
2 |
|
|
|
13 |
|
Lease payments |
|
|
(45) |
|
|
|
(46) |
|
Foreign exchange movement |
|
|
- |
|
|
|
1 |
|
Amortisation of discounting |
|
|
7 |
|
|
|
8 |
|
Derecognition due to lease modification |
|
|
(62) |
|
|
|
- |
|
Transfers and other movements |
|
|
(16) |
|
|
|
(31) |
|
|
|
|
|
|
|
|
|
|
At the end of the financial year |
|
|
269 |
|
|
|
383 |
|
|
|
|
|
|
|
|
|
|
Comprising: |
|
|
|
|
|
|
|
|
Current liabilities |
|
|
35 |
|
|
|
61 |
|
Non-current liabilities |
|
|
234 |
|
|
|
322 |
|
|
|
|
|
|
|
|
|
|
(1) Refer to Note 25 New and amended accounting standards and interpretations. |
|
|
|
|
|
|
|
|
A significant proportion by value of BHP Petroleums lease contracts relate to building leases, drill rig and equipment leases.
These lease contracts contain a wide variety of different terms and considerations including extension and termination options and variable lease payments. BHP Petroleums lease obligations are included in the interest-bearing liabilities.
|
|
|
|
|
|
|
|
|
The maturity profile of lease liabilities based on the undiscounted contractual amounts is as
follows: |
|
|
|
|
|
|
|
|
|
|
2021 US$M |
|
|
2020 US$M |
|
Due for payment: |
|
|
|
|
|
|
|
|
In one year or less or on demand |
|
|
41 |
|
|
|
70 |
|
In more than one year but not more than two years |
|
|
37 |
|
|
|
70 |
|
In more than two years but not more than five years |
|
|
91 |
|
|
|
130 |
|
In more than five years (1)
|
|
|
133 |
|
|
|
156 |
|
|
|
|
|
|
|
|
|
|
Total |
|
|
302 |
|
|
|
426 |
|
|
|
|
|
|
|
|
|
|
Less amount representing interest |
|
|
33 |
|
|
|
43 |
|
|
|
|
|
|
|
|
|
|
Present value of net minimum lease payments |
|
|
269 |
|
|
|
383 |
|
|
|
|
|
|
|
|
|
|
(1) Includes US$9 million (2020: US$35 million) due for payment in more than ten years. |
|
|
|
|
|
|
|
|
At 30 June 2021, commitments for leases not yet commenced based on undiscounted contractual amounts were US$36 million (2020:
US$14 million). At 30 June 2021, commitments relating to short-term leases were US$8 million (2020: US$2 million).
26
BHP Petroleum Assets
Notes to the Financial Statements
BHP Petroleums aggregate amounts of minimum lease payments under
non-cancellable operating leases at 30 June 2019 under IAS 17 were as follows:
|
|
|
|
|
Commitments under operating leases |
|
Unaudited 2019 US$M |
|
Due not later than one year |
|
|
58 |
|
Due later than one year and not later than five years |
|
|
155 |
|
Due later than five years |
|
|
189 |
|
|
|
|
|
|
Total |
|
|
402 |
|
|
|
|
|
|
As at 30 June 2019, BHP Petroleum did not recognise any finance lease liabilities under IAS 17 Leases.
Movements in BHP Petroleums right-of-use assets during the
year are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2021 |
|
|
2020 |
|
|
|
Land and buildings US$M |
|
|
Plant and equipment US$M |
|
|
Total US$M |
|
|
Land and buildings US$M |
|
|
Plant and equipment US$M |
|
|
Total US$M |
|
Net book value |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At the beginning of the financial year |
|
|
167 |
|
|
|
96 |
|
|
|
263 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Assets recognised on adoption of IFRS 16 |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
233 |
|
|
|
128 |
|
|
|
361 |
|
Additions |
|
|
1 |
|
|
|
- |
|
|
|
1 |
|
|
|
4 |
|
|
|
9 |
|
|
|
13 |
|
Depreciation for the period |
|
|
(18) |
|
|
|
(26) |
|
|
|
(44) |
|
|
|
(23) |
|
|
|
(41) |
|
|
|
(64) |
|
Impairments for the year |
|
|
(27) |
|
|
|
- |
|
|
|
(27) |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Derecognition due to lease modification |
|
|
- |
|
|
|
(62) |
|
|
|
(62) |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Transfers and other movements (1) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(47) |
|
|
|
- |
|
|
|
(47) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At the end of the financial year |
|
|
123 |
|
|
|
8 |
|
|
|
131 |
|
|
|
167 |
|
|
|
96 |
|
|
|
263 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- Cost |
|
|
190 |
|
|
|
29 |
|
|
|
219 |
|
|
|
189 |
|
|
|
106 |
|
|
|
295 |
|
- Accumulated depreciation and impairments |
|
|
(67) |
|
|
|
(21) |
|
|
|
(88) |
|
|
|
(22) |
|
|
|
(10) |
|
|
|
(32) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Transfer to net investment in sublease receivable, on commencement of sublease. |
|
Right-of-use assets are included within the underlying
asset classes in property, plant and equipment. Refer to Note 8 Property, plant and equipment.
27
BHP Petroleum Assets
Notes to the Financial Statements
Amounts recorded in the income statement and the cash flow statement for the year were:
|
|
|
|
|
|
|
|
|
|
|
|
|
2021 US$M |
|
|
2020 US$M |
|
|
Included within |
|
|
|
|
Income statement |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation of right-of-use assets |
|
|
37 |
|
|
|
46 |
|
|
Profit from operations |
|
|
|
|
Short-term, low-value and
variable lease costs (1) |
|
|
52 |
|
|
|
37 |
|
|
Profit from operations |
|
|
|
|
Interest on lease liabilities |
|
|
7 |
|
|
|
8 |
|
|
Financial expenses |
|
|
|
|
Cash flow statement |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Principal lease payments |
|
|
38 |
|
|
|
39 |
|
|
Cash flows from financing activities |
|
|
|
|
Lease interest payments |
|
|
7 |
|
|
|
7 |
|
|
Cash flows from operating activities |
|
(1) |
Relates to US$36 million of variable lease costs (2020: US$22 million), US$13 million of short-term lease costs
(2020: US$10 million) and US$3 million of low-value lease costs (2020: US$5 million). Variable lease costs include contracts for building leases, drill rig and equipment leases. These contracts contain
variable lease payments based on usage and asset performance. |
Recognition and measurement (following adoption of IFRS 16)
All leases with the exception of short-term (under 12 months) and low-value leases are recognised on the balance sheet, as a right-of-use asset and a corresponding interest-bearing liability. Lease liabilities are initially measured at the present value of the future lease payments from the lease
commencement date and are subsequently adjusted to reflect the interest on lease liabilities, lease payments and any remeasurements due to, for example, lease modifications or changes to future lease payments linked to a rate. Lease payments are
discounted using the interest rate implicit in the lease, where it is readily determinable. Where the implicit interest rate is not readily determinable, the interest payments are discounted at BHP Groups incremental borrowing rate, adjusted
to reflect factors specific to the lease, including where relevant the currency, tenor and location of the lease.
In addition to containing a lease, the contractual
arrangements may include non-lease components (for example, the maintenance and service costs associated with building leases). BHP Petroleum has elected to separate these
non-lease components from the lease components in measuring lease liabilities.
Low-value and short-term leases are expensed to the income statement. Variable lease payments not dependent on an index or rate
are excluded from lease liabilities and expensed to the income statement.
Right-of-use assets are measured at cost, less any accumulated depreciation and
impairment losses and adjusted for any remeasurement of lease liabilities. The cost will initially correspond to the lease liability, adjusted for initial direct costs, lease payments made prior to lease commencement, capitalised provisions for
closure and rehabilitation and any lease incentives.
Lease costs are recognised in the income statement over the lease term in the form of depreciation on the right-of-use asset and finance charges representing the unwind of the discount on the lease liability, replacing certain operating lease expenses previously reported under IAS
17.
Where BHP Petroleum is the operator of an unincorporated joint operation and all investors are parties to a lease, BHP Petroleum recognises its proportionate
share of the lease liability and associated right-of-use asset. In the event BHP Petroleum is the sole signatory to a lease and therefore has the sole legal obligation
to make lease payments, the lease liability is recognised in full. Where the associated right-of-use asset is sub-leased (under a
finance sub-lease) to a joint operation, for instance where it is dedicated to a single operation and the joint operation has the right to direct the use of the asset, BHP Petroleum recognises its
proportionate share of the right-of-use asset and a net investment in the lease, representing amounts to be recovered from the other parties to the joint operation. If
BHP Petroleum is not party to the lease contract but sub-leases the associated right-of-use asset, the proportionate share of the
right-of-use asset and a lease liability which is payable to the operator is recognised.
28
BHP Petroleum Assets
Notes to the Financial Statements
Key judgements and estimates
Where BHP Petroleum cannot readily determine the interest rate implicit in the lease, estimation is involved in the determination of the weighted average incremental
borrowing rate to measure lease liabilities. The incremental borrowing rate reflects the rates of interest a lessee would have to pay to borrow over a similar term, with similar security, the funds necessary to obtain an asset of similar value to
the right-of-use asset in a similar economic environment. Under BHP Groups portfolio approach to debt management, it does not specifically borrow for asset
purchases. Therefore, the incremental borrowing rate is estimated with reference to BHP Groups corporate borrowing portfolio, adjusted to reflect the terms and conditions of the lease (including the impact of currency, credit rating of
subsidiary entering into the lease and the term of the lease), at the commencement of the lease arrangement or the time of lease modification.
BHP Petroleum
estimates stand-alone prices, where such prices are not readily observable, in order to allocate the contractual payments between lease and non-lease components.
IAS 17 Leases replaced by IFRS 16
BHP Petroleum applied accounting standard
IAS 17 prior to adoption of IFRS 16 from 1 July 2019. Pre 1 July 2019, BHP Petroleum had no leases classified as finances leases under IAS17, however had a number of leases classified as operating leases as at 30 June 2019. Operating
leases under IAS 17 are not capitalised and rental payments are included in the income statement on a straight-line basis over the lease term. Minimum lease payments under non-cancellable operating leases as
at 30 June 2019 are disclosed above.
The effect of applying IFRS 16 has been disclosed in Note 25 New and amended accounting
standards.
11. Intangible assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2021 US$M |
|
|
2020 US$M |
|
|
Unaudited
2019 US$M |
Net book value |
|
|
|
|
|
|
|
|
|
|
At the beginning of the financial year |
|
|
110 |
|
|
|
104 |
|
|
149 |
Additions |
|
|
19 |
|
|
|
44 |
|
|
6 |
Amortisation for the year (1) |
|
|
(32) |
|
|
|
(38) |
|
|
(37) |
Impairment for the year
(2) |
|
|
(19) |
|
|
|
|
|
|
(14) |
|
|
|
|
|
|
|
|
|
|
|
|
|
At the end of the financial year |
|
|
78 |
|
|
|
110 |
|
|
104 |
|
|
|
|
|
|
|
|
|
|
|
|
|
- Cost |
|
|
248 |
|
|
|
305 |
|
|
298 |
- Accumulated depreciation and impairments |
|
|
(170) |
|
|
|
(195) |
|
|
(194) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
Included in income statement line item Expenses excluding net finance costs. |
|
(2) |
Refer to Note 12 Impairment of non-current assets for information
on impairments. |
Recognition and measurement
Where
applicable, BHP Petroleum capitalises amounts paid for initial payments for the acquisition of identifiable intangible assets, such as software, licenses and initial payments for the acquisition of petroleum lease assets, where it is considered that
they will contribute to future periods through revenue generation or reductions in cost. These assets, classified as finite life intangible assets, are carried in the balance sheet at the fair value of consideration paid less accumulated
amortisation and impairment charges. Intangible assets with finite useful lives are amortised on a straight-line basis over their useful lives. The estimated useful lives are generally no greater than ten years.
29
BHP Petroleum Assets
Notes to the Financial Statements
Intangible assets primarily represent payments made for exploration leases, which have finite useful lives. Initial
payments for the acquisition of intangible exploration lease assets are capitalised and amortised over the term of the permit. A regular review is undertaken of each area of interest to determine the appropriateness of continuing to carry forward
costs in relation to that area. Capitalised costs are only carried forward to the extent that they are expected to be recovered through the successful exploitation of the area of interest or alternatively by its sale. To the extent that capitalised
expenditure is no longer expected to be recovered, it is charged to the income statement.
Key judgements and estimates
Assessment of impairment indicators requires managements judgement. If a judgement is made that recovery of previously capitalised intangible petroleum lease assets
is unlikely, the relevant amount will be charged to the income statement.
Determining the recoverable amount requires management to make certain estimates and
assumptions as to future events and circumstances, in particular whether an economically viable extraction operation can be established.
Where indications of
impairment exist for intangible assets, in the absence of quoted market prices, estimates are made regarding the present value of future post-tax cash flows. These estimates require managements judgement
and assumptions and are subject to risk and uncertainty that may be beyond the control of BHP Petroleum; hence there is a possibility that changes in circumstances will materially alter projections, which may impact the recoverable amount of assets
at each reporting date. The estimates are made from the perspective of a market participant and includes prices, future production volumes operating costs, tax attributes and discount rates.
30
BHP Petroleum Assets
Notes to the Financial Statements
12. Impairment of non-current assets
|
|
|
|
|
|
|
|
|
|
|
|
|
As at 30 June 2021 |
|
Property, plant and equipment US$M |
|
|
Intangibles US$M |
|
|
Total US$M |
|
Previously capitalised exploration and evaluation cost (1) |
|
|
66 |
|
|
|
- |
|
|
|
66 |
|
Abandoned/relinquished exploration leases (2) |
|
|
- |
|
|
|
19 |
|
|
|
19 |
|
Leasehold fit out and fittings (3)
|
|
|
42 |
|
|
|
- |
|
|
|
42 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total impairment of non-current assets |
|
|
108 |
|
|
|
19 |
|
|
|
127 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As at 30 June 2020 |
|
Property, plant and equipment US$M |
|
|
Intangibles US$M |
|
|
Total US$M |
|
Other |
|
|
11 |
|
|
|
- |
|
|
|
11 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total impairment of non-current assets |
|
|
11 |
|
|
|
- |
|
|
|
11 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unaudited As at 30 June 2019 |
|
Property, plant and equipment US$M |
|
|
Intangibles US$M |
|
|
Total US$M |
|
Previously capitalised exploration and evaluation cost (1) |
|
|
7 |
|
|
|
13 |
|
|
|
20 |
|
Abandoned/relinquished exploration leases (2) |
|
|
- |
|
|
|
1 |
|
|
|
1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total impairment of non-current assets |
|
|
7 |
|
|
|
14 |
|
|
|
21 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
Write-off of previously capitalised exploration and evaluation cost, following
technical analysis of exploration results for various areas of interest. |
|
(2) |
Write-off of capitalised exploration costs, where no further exploration and
evaluation work was planned, following technical review of exploration portfolio. |
|
(3) |
Write-off of leasehold fit out and fittings following restructuring, which
resulted in a reduction in required office space. |
For all impairments recognised in FY2021, FY2020 and FY2019, the recoverable amount of
individual assets impaired was determined to be US$ nil following impairment review.
Recognition and measurement
Impairment tests for all assets are performed when there is an indication of impairment. If the carrying amount of the asset exceeds its recoverable amount, the asset is
impaired, and an impairment loss is charged to the income statement so as to reduce the carrying amount in the balance sheet to its recoverable amount.
Where
applicable, previously impaired assets are reviewed for possible reversal of previous impairment at each reporting date. Impairment reversal cannot exceed the carrying amount that would have been determined (net of depreciation) had no impairment
loss been recognised for the asset. There were no reversals of impairment in the current or prior periods presented.
How recoverable amount is calculated
The recoverable amount is the higher of an assets fair value less cost of disposal and its value in use. For the purposes of assessing impairment, assets
are grouped at the lowest levels for which there are separately identifiable cash flows.
31
BHP Petroleum Assets
Notes to the Financial Statements
Valuation methods
Fair
value less cost of disposal (FVLCD)
FVLCD is an estimate of the amount that a market participant would pay for an asset, less the cost of disposal. FVLCD is
generally determined using independent market assumptions to calculate the present value of the estimated future post-tax cash flows expected to arise from the continued use of the asset, including the
anticipated cash flow effects of any capital expenditure to enhance production or reduce cost and its eventual disposal where a market participant may take a consistent view. Cash flows are discounted using an appropriate post tax market discount
rate to arrive at a net present value of the asset, which is compared against the assets carrying value. FVLCD may also take into consideration other market-based indicators of fair value.
Value in Use (VIU)
VIU is determined as the present value of the estimated
future cash flows expected to arise from the continued use of the asset in its present form and its eventual disposal or closure. VIU is determined by applying assumptions specific to our continued use and cannot take into account future
development. These assumptions are different to those used in calculating FVLCD and consequently the VIU calculation is likely to give a different result (usually lower) to a FVLCD calculation.
Key judgements and estimates
Judgements: Assessment of indicators of
impairment or impairment reversal require significant management judgement. Indicators of impairment may include changes in BHP Petroleums operating and economic assumptions, including those arising from changes in reserves, updates to the
commodity supply, demand and price forecasts, or the possible additional impacts from emerging risks such as those related to climate change and the transition to a low carbon economy and pandemics similar to
COVID-19.
Climate Change
BHP
Petroleum operated for all periods presented as part of BHP Group. As such, BHP Petroleum does not have a stand-alone climate change strategy. Future changes to BHP Groups climate change strategy, global decarbonisation signposts or physical
risks to BHP Petroleums assets may impact BHP Petroleum significant judgements and key estimates and result in material changes to financial results and the carrying values of certain assets and liabilities in future reporting periods.
When considering asset impairment assessment of BHP Petroleum, future impacts related to climate change and the transition to a lower carbon economy may include:
|
● |
|
demand for BHP Petroleums commodities decreasing, due to policy, regulatory (including carbon pricing mechanisms),
legal, technological, market or societal responses to climate change, resulting in a proportion of reserves becoming incapable of extraction in an economically viable fashion |
|
● |
|
physical impacts related to acute risks resulting from increased severity of extreme weather events and those related to
chronic risks resulting from longer-term changes in climate patterns. |
Where sufficiently developed, the potential financial impacts on BHP
Petroleum of climate change and the transition to a low carbon economy have been considered in the assessment of indicators of impairment, including:
|
● |
|
BHP Groups current assumptions relating to demand for commodities and carbon pricing, including their impact on BHP
Groups long-term price forecasts applied by BHP Petroleum |
|
● |
|
BHP Groups operational emissions reduction strategy |
32
BHP Petroleum Assets
Notes to the Financial Statements
COVID-19
The macroeconomic disruptions relating to COVID-19 and mitigating actions enforced by health authorities create uncertainty in BHP
Petroleums operating and economic assumptions, including commodity prices, demand and supply volumes, operating costs and applied discount rates. However, given the long-lived nature of the majority of BHP Petroleums assets, COVID-19 did not, in isolation, result in the identification of indicators of impairment for BHP Petroleums asset values at 30 June 2021. Due to ongoing uncertainty as to the extent and duration of COVID-19 restrictions and the overall impact on economic activity, actual experience may materially differ from internal forecasts and may result in the reassessment of indicators of impairment for BHP
Petroleums assets in future reporting periods.
Estimates: BHP Petroleum performs a recoverable amount determination for an asset when there is an
indication of impairment or impairment reversal.
When the recoverable amount is measured by reference to FVLCD, in the absence of quoted market prices or binding
sale agreement, estimates are made regarding the present value of future post-tax cash flows. These estimates are made from the perspective of a market participant and include prices, future production
volumes, operating costs, capital expenditure, closure and rehabilitation costs, tax attributes, risking factors applied to cash flows and discount rates. Reserves and resources are included in the assessment of FVLCD to the extent that it is
considered probable that a market participant would attribute value to them.
When recoverable amount is measured using VIU, estimates are made regarding the present
value of future cash flows based on internal budgets and forecasts and life of asset plans. Key estimates are similar to those identified for FVLCD, although some assumptions and values may differ as they reflect the perspective of management rather
than a market participant.
All estimates require management judgements and assumptions and are subject to risk and uncertainty that may be beyond the control of BHP
Petroleum; hence, there is a possibility that changes in circumstances will materially alter projections, which may impact the recoverable amount of assets at each reporting date.
The most significant estimates impacting BHP Petroleums recoverable amount determinations include:
Commodity prices
Commodity prices were based on BHP Petroleums latest
internal forecasts which assume that short-term market prices will revert to BHP Petroleums assessment of long-term prices. These price forecasts reflect managements long-term views of global supply and demand, built upon past experience
of the commodity markets and are benchmarked with external sources of information such as analyst forecasts. Prices are adjusted based upon premiums or discounts applied to global price markers based on the location, nature and quality produced, or
to take into account contracted prices.
Future production volumes
Estimated production volumes were based on detailed data and took into account development plans established by management as part of BHP Petroleums long-term
planning process. When estimating FVLCD, assumptions reflect all reserves and resources that a market participant would consider when valuing assets, which in some cases are broader in scope than the reserves that would be used in a VIU test. In
determining FVLCD, risk factors may be applied to reserves and resources which do not meet the criteria to be treated as proved.
33
BHP Petroleum Assets
Notes to the Financial Statements
Operating costs and capital expenditures
Operating costs and capital expenditures are generally based on internal budgets and forecasts and life of asset plans. Cost assumptions reflect managements
experience and expectations. In the case of FVLCD, cash flow projections include the anticipated cash flow effects of any capital expenditure to enhance production or reduce cost where a market participant may take a consistent view. VIU does not
take into account future development.
Discount rates
BHP Petroleum uses
real post-tax discount rates applied to real post-tax cash flows. The discount rates are derived using BHP Groups weighted average cost of capital methodology.
Adjustments to the rates are made for any risks that are not reflected in the underlying cash flows.
13. Trade and other payables
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2021 US$M |
|
|
2020 US$M |
|
|
Unaudited, 2019 US$M |
|
Trade payables external |
|
|
641 |
|
|
|
491 |
|
|
|
625 |
|
Other payables |
|
|
278 |
|
|
|
280 |
|
|
|
304 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total trade and other payables |
|
|
919 |
|
|
|
771 |
|
|
|
929 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
34
BHP Petroleum Assets
Notes to the Financial Statements
14. |
Closure and rehabilitation provisions |
A reconciliation of the changes in the closure and rehabilitation provisions is shown in the following table:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2021 US$M |
|
|
2020 US$M |
|
|
Unaudited 2019 US$M |
|
At the beginning of the financial year |
|
|
3,595 |
|
|
|
2,300 |
|
|
|
1,980 |
|
Capitalised amounts for operating sites: |
|
|
|
|
|
|
|
|
|
|
|
|
Change in estimate |
|
|
131 |
|
|
|
486 |
|
|
|
334 |
|
Impact of change in discount rate |
|
|
- |
|
|
|
775 |
|
|
|
- |
|
Exchange translation |
|
|
162 |
|
|
|
(24) |
|
|
|
(42) |
|
Adjustments charged/(credited) to the income statement for closed sites: |
|
|
|
|
|
|
|
|
|
|
|
|
Change in estimate |
|
|
17 |
|
|
|
19 |
|
|
|
(11) |
|
Impact of change in discount rate |
|
|
- |
|
|
|
22 |
|
|
|
- |
|
Exchange translation |
|
|
10 |
|
|
|
(2) |
|
|
|
(3) |
|
Other adjustments to the provision: |
|
|
|
|
|
|
|
|
|
|
|
|
Amortisation of discounting impacting net finance costs |
|
|
94 |
|
|
|
106 |
|
|
|
111 |
|
Acquisition of subsidiaries and operations |
|
|
179 |
|
|
|
- |
|
|
|
- |
|
Divestment and demerger of subsidiaries and operations |
|
|
(81) |
|
|
|
- |
|
|
|
- |
|
Expenditure on closure and rehabilitation activities |
|
|
(152) |
|
|
|
(86) |
|
|
|
(67) |
|
Exchange variations impacting foreign currency translation reserve |
|
|
2 |
|
|
|
(1) |
|
|
|
(2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At the end of the financial year |
|
|
3,957 |
|
|
|
3,595 |
|
|
|
2,300 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprising: |
|
|
|
|
|
|
|
|
|
|
|
|
Current |
|
|
141 |
|
|
|
162 |
|
|
|
205 |
|
Non-current |
|
|
3,816 |
|
|
|
3,433 |
|
|
|
2,095 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating sites |
|
|
3,623 |
|
|
|
3,292 |
|
|
|
2,043 |
|
Closed sites |
|
|
334 |
|
|
|
303 |
|
|
|
257 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BHP Petroleum is required to rehabilitate sites and associated facilities at the end of, or in some cases, during the course of
production, to a condition acceptable to the relevant authorities, as specified in license requirements and BHP Groups environmental performance requirements as set out within the BHP Group Charter.
The key components of closure and rehabilitation activities are:
|
|
|
the removal of all unwanted infrastructure associated with an operation |
|
|
|
the return of disturbed areas to a safe, stable, productive and self-sustaining condition, consistent with agreed end use
|
Recognition and measurement
Provisions for closure and
rehabilitation are recognised by BHP Petroleum when:
|
|
|
it has a present legal or constructive obligation as a result of past events; |
|
|
|
it is more likely than not that an outflow of resources will be required to settle the obligation; |
|
|
|
the amount can be reliably estimated. |
35
BHP Petroleum Assets
Notes to the Financial Statements
Initial recognition
Closure
and rehabilitation provisions are initially recognised when an environmental disturbance first occurs. The individual site provisions are an estimate of the expected value of future cash flows required to rehabilitate the relevant site using current
restoration standards and techniques and taking into account risks and uncertainties. Individual site provisions are discounted to their present value using currency specific discount rates aligned to the estimated timing of cash outflows.
When provisions for closure and rehabilitation are initially recognised, the corresponding cost is capitalised as an asset, representing part of the cost of acquiring
the future economic benefits of the operation.
Subsequent measurement
The
closure and rehabilitation asset, recognised within property, plant and equipment, is depreciated over the life of the operations. The value of the provision is progressively increased over time as the effect of discounting unwinds, resulting in an
expense recognised in net finance costs.
The closure and rehabilitation provision is reviewed at each reporting date to assess if the estimate continues to reflect
the best estimate of the obligation. If necessary, the provision is remeasured to account for factors, including:
|
|
|
revisions to estimated reserves, resources and lives of operations; |
|
|
|
developments in technology; |
|
|
|
regulatory requirements and environmental management strategies; |
|
|
|
changes in the estimated extent and costs of anticipated activities, including the effects of inflation and movements in
foreign exchange rates, where applicable; |
|
|
|
movements in interest rates affecting the discount rate applied. |
Changes to the closure and rehabilitation estimate for operating sites are added to, or deducted from, the related asset and amortised on a prospective basis accordingly
over the remaining life of the operation, generally applying the UoP method.
Costs arising from unforeseen circumstances, such as the contamination caused by
unplanned discharges, are recognised as an expense and liability when incurred.
Closed sites
Where future economic benefits are no longer expected to be derived through operations, changes to the associated closure and remediation costs are charged to the income
statement in the period identified.
Key estimates
The recognition and
measurement of closure and rehabilitation provisions requires the use of significant estimates and assumptions, including, but not limited to:
|
|
|
the extent (due to legal or constructive obligations) of potential activities required for the removal of infrastructure and
rehabilitation activities; |
|
|
|
costs associated with future rehabilitation activities; |
|
|
|
applicable discount rates; |
|
|
|
the timing of cash flows and ultimate closure of operations. |
36
BHP Petroleum Assets
Notes to the Financial Statements
The extent and cost of future rehabilitation activities may also be impacted by the potential physical impacts of
climate change. In estimating the potential cost of closure activities, BHP Petroleum considers factors such as long-term weather outlooks, for example forecast changes in rainfall patterns and the cost of performing rehabilitation activities.
While progressive closure is performed across a number of operations, significant rehabilitation activities are generally undertaken at the end of the production life at
the individual sites, the estimated timing of which is informed by BHP Petroleums current assumptions relating to demand for commodities and their impact on BHP Petroleums long-term price forecasts. Remaining production lives range from 1-36 years with an average for all sites, weighted by current closure provision, of approximately 17 years. The discount rates applied to BHP Petroleums closure and rehabilitation provisions are determined by
reference to the currency of the closure cash flows, the period over which the cash flows will be incurred and prevailing market interest rates (where available). The effect of prior year (FY2020) changes to discount rates was an increase of
approximately US$797 million in the closure and rehabilitation provision. There were no changes to the discount in the current year or FY2019.
While the
closure and rehabilitation provisions reflect managements best estimates based on current knowledge and information, further studies and detailed analysis of the closure activities for individual assets will be performed as the assets near the
end of their operational life and/or detailed closure plans are required to be submitted to relevant regulatory authorities. Such studies and analysis can impact the estimated costs of closure activities. Estimates can also be impacted by the
emergence of new restoration techniques, changes in regulatory requirements for rehabilitation, risks relating to climate change and the transition to a low carbon economy and experience at other operations. These uncertainties may result in future
actual expenditure differing from the amounts currently provided for in the balance sheet.
Sensitivity
A further 0.5 per cent decrease in the discount rates applied at 30 June 2021 would result in an increase to the closure and rehabilitation provision of
approximately US$245 million, an increase in property, plant and equipment of approximately US$241 million in relation to operating sites and an income statement charge of approximately US$4 million in respect of closed sites. In
addition, the change would result in an increase of approximately US$46 million in depreciation expense and a US$13 million reduction in net finance costs for the year ending 30 June 2022.
Given the long-lived nature of the majority of BHP Petroleums assets, closure activities are generally not expected to occur for a significant period of time. A one-year acceleration in forecast cash flows of BHP Petroleums closure and rehabilitation provisions, in isolation, would result in an increase to the provision of approximately US$53 million, an increase
in property, plant and equipment of US$46 million in relation to operating sites and an income statement charge of US$7 million in respect of closed sites.
The disclosure below excludes closure and rehabilitation provisions (refer to Note 14 Closure and rehabilitation provisions), employee benefits,
restructuring and post-retirement employee benefits provisions (refer to Note 18 Employee benefits, restructuring and post-retirement employee benefits provisions).
37
BHP Petroleum Assets
Notes to the Financial Statements
A reconciliation of changes in other provisions for other liabilities is shown in the following table:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2021 US$M |
|
|
2020 US$M |
|
|
Unaudited 2019 US$M |
|
At the beginning of the financial year |
|
|
168 |
|
|
|
259 |
|
|
|
229 |
|
Charge/(credit) for the year: |
|
|
|
|
|
|
|
|
|
|
|
|
Disposals |
|
|
(1) |
|
|
|
- |
|
|
|
30 |
|
Underlying |
|
|
122 |
|
|
|
94 |
|
|
|
193 |
|
Discounting |
|
|
1 |
|
|
|
3 |
|
|
|
10 |
|
Exchange variations |
|
|
6 |
|
|
|
- |
|
|
|
- |
|
Released during the year |
|
|
(7) |
|
|
|
(43) |
|
|
|
(69) |
|
Utilisation |
|
|
(57) |
|
|
|
(85) |
|
|
|
(138) |
|
Transfers and other movements |
|
|
1 |
|
|
|
(60) |
|
|
|
4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At the end of the financial year |
|
|
233 |
|
|
|
168 |
|
|
|
259 |
|
Comprising: |
|
|
|
|
|
|
|
|
|
|
|
|
Current |
|
|
137 |
|
|
|
145 |
|
|
|
137 |
|
Non-current |
|
|
96 |
|
|
|
23 |
|
|
|
122 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16. |
Contingent liabilities |
BHP Petroleums total contingent liabilities for subsidiaries and joint operations as at 30 June 2021 is US$759 million (2020: US$687 million, 2019:
US$713 million).
A contingent liability is a possible obligation arising from past events and whose existence will be confirmed only by occurrence or non-occurrence of one or more uncertain future events not wholly within the control of BHP Petroleum. A contingent liability may also be a present obligation arising from past events but is not recognised on the
basis that an outflow of economic resources to settle the obligation is not viewed as probable, or the amount of the obligation cannot be reliably measured.
When
BHP Petroleum has a present obligation, an outflow of economic resources is assessed as probable and the obligation can be reliably measured, a provision is recognised. BHP Petroleums contingent liabilities primarily include possible
obligations for litigation, uncertain tax and royalty matters, open regulatory audits and various other claims, for which the timing of resolution and potential economic outflow is uncertain. Obligations assessed as having probable future economic
outflows capable of reliable measurement are provided at reporting date and matters assessed as having possible future economic outflows capable of reliable measurement are included in the total amount of contingent liabilities above.
|
|
|
|
|
|
|
Uncertain tax and royalty matters |
|
BHP Petroleum
is subject to a range of taxes and royalties across many jurisdictions, the application of which is uncertain in some regards. Changes in tax law, changes in interpretation of tax law, periodic challenges and disagreements with tax authorities and
legal proceedings result in uncertainty of the outcome of the application of taxes and royalties to BHP Petroleums business. Areas of uncertainty at reporting date include the application of taxes and royalties to BHP Petroleums
cross-border operations and transactions. To the extent uncertain
tax and royalty matters give rise to a contingent liability, an estimate of the potential liability is included within the above total, where it is capable of reliable measurement.
|
38
BHP Petroleum Assets
Notes to the Financial Statements
|
|
|
|
|
|
|
Open regulatory
audits |
|
Under contractual terms, BHP Petroleum is subject to regulatory
and joint venture partner audit activity on a routine basis. |
|
BHP Petroleum has included contingent liabilities for various periods remaining under audit
with regulatory bodies; primarily related to cost recovery claimed by BHP Petroleum, as operator, under contractual terms. |
|
To the extent that outcomes of audits remain uncertain, these
may give rise to a contingent liability. An estimate of the potential outflow is included within the above total, where it is capable of reliable measurement. |
BHP Petroleum has entered into various counterindemnities of bank and performance guarantees related to its own future
performance, which are entered into in the normal course of business. The likelihood of these guarantees being called upon is considered remote.
17. |
Financial risk management |
Capital Management
BHP Petroleum has operated for all periods presented as
part of BHP Group, with capital of BHP Petroleum managed in accordance with BHP Group capital management strategies and priorities. BHP Group defines capital as the total equity of BHP Group. BHP Group seeks to maintain a strong balance sheet and
deploys its capital with reference to BHP Group Capital Allocation Framework. BHP Group monitors capital using BHP Groups net debt balance and BHP Groups gearing ratio, being the ratio of net debt to net debt plus net assets. Capital is
managed with the goal of maintaining levels of gearing designed to optimise the cost of capital and return on capital employed, while also growing the business consistently through project developments and acquisitions across BHP Group portfolio of
assets.
BHP Petroleums strategy, as part of BHP Group, is to focus on upstream, large, long life, low cost and expandable assets. BHP Group and BHP Petroleum
continually review its portfolio to identify assets that do not fit this strategy. BHP Group, together with BHP Petroleum, will invest capital in assets that fit its strategy.
Financial risks
BHP Petroleum has operated for all periods presented as part
of BHP Group; with BHP Petroleums financial risks considered and managed by the BHP Group Financial Risk Management Committee (FRMC) under authority delegated by the BHP Group Chief Executive Officer.
Financial risk management strategy
The financial risks arising from BHP
Petroleums operations are market risk, including risks associated with movements in interest rates, currency exchange rates and commodity prices, liquidity risk and credit risk. These risks arise in the normal course of business and BHP
Petroleum manages its exposure to them in accordance with the BHP Group Portfolio Risk Management Strategy.
Primary responsibility for identification and control of
financial risks rests with the BHP Groups FRMC under authority delegated by the BHP Group Chief Executive Officer.
The FRMC reviews the effectiveness of
internal controls related to commodity price risk, counterparty credit risk, financing risk, interest rate risk and insurance. The FRMC monitors the financial risk management policies and exposures and approves financial transactions within the
scope of its authority.
39
BHP Petroleum Assets
Notes to the Financial Statements
BHP Petroleums risk exposure and responses
BHP Petroleums operations expose it to a variety of financial risks that include commodity price risk, liquidity risk, credit risk, currency risk and interest rate
risk.
The individual risks along with the responses of BHP Petroleum are set out below.
Credit risk
Trade receivables generally have terms of less than 30 days. BHP
Petroleum has no material concentration of credit risk with any single counterparty.
Refer to Note 6 Trade and other receivables for details on BHP
Petroleums credit risk.
Commodity price risk
BHP Petroleum is
exposed to movements in the prices of the products that are sold as commodities on the market. While fluctuations occur in the market, it would take significant decreases over an extended period of time to have a material effect on results of
operations.
Interest rate risk
BHP Petroleum is exposed to interest rate
risk on its outstanding borrowings and short-term cash deposits from the possibility that changes in interest rate will affect future cash flows. BHP Petroleum does not have exposure to external facing debt - with all current debt funding provided
by BHP Group entities.
The majority of BHP Petroleums debt is issued at London Interbank Offered Rate (LIBOR) interest rates. Based on the net debt position
as at 30 June 2021, it is estimated that a one percentage point increase in the US LIBOR interest rate will decrease BHP Petroleums equity and profit after taxation by US$67 million (2020: decrease of US$98 million, 2019:
decrease of US$112 million). This assumes the change in interest rates is effective from the beginning of the financial year and the net debt balances are constant over the year.
Interest rate benchmark reform
LIBOR and other benchmark interest rates are
expected to be replaced by alternative risk-free rates (ARR) by the end of CY2021 as part of inter-bank offer rate (IBOR) reform. BHP Group has established a project to assess the implications of IBOR reform across BHP Group and to manage and
execute the transition from current discontinuing IBORs rates to ARR, including updating policies, systems and processes.
BHP Petroleum has early adopted amendments
to IFRS 9 Financial Instruments, IFRS 7 Financial Instruments: Disclosures and IFRS 16 Leases in relation to IBOR reform.
Currency risk
The US dollar is the predominant functional currency within BHP
Petroleum and as a result, currency exposures arise from transactions and balances in currencies other than the US dollar. BHP Petroleums potential currency exposures comprise:
|
|
|
translational exposure in respect of non-functional currency monetary items
|
|
|
|
transactional exposure in respect of non-functional currency expenditure and
revenues. |
40
BHP Petroleum Assets
Notes to the Financial Statements
The following table shows the foreign currency risk arising from financial assets and liabilities, which
are denominated in currencies other than the US dollar:
|
|
|
|
|
|
|
|
|
|
|
|
|
Net financial (liabilities)/assets - by currency of denomination |
|
2021 US$M |
|
|
2020 US$M |
|
|
Unaudited 2019 US$M |
|
Australian dollars |
|
|
(95) |
|
|
|
68 |
|
|
|
101 |
|
Other |
|
|
37 |
|
|
|
6 |
|
|
|
15 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
(58) |
|
|
|
74 |
|
|
|
116 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The principal non-functional currency exposure for BHP Petroleum is the Australian dollar. Based
on BHP Petroleums net financial assets and liabilities as at 30 June 2021, a weakening of the US dollar against this currency (one cent strengthening in the Australian dollar), with all other variables held constant, would decrease BHP
Petroleums equity and profit after taxation by US$1 million (2020: increase of US$1 million, 2019: increase of US$1 million).
Liquidity risk
BHP Petroleums liquidity risk arises from the possibility that it may not be able to settle or meet its obligations as they fall due. The risk is managed
as part of BHP Groups Portfolio Risk Management Strategy and within BHP Groups overall Cash Flow at Risk (CFaR) limit.
41
BHP Petroleum Assets
Notes to the Financial Statements
The tables below summarise the timing of cash outflows relating to payables, including those to BHP
Group entities and leases:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2021 US$M |
|
Trade and other payables |
|
|
Payables to BHP Group |
|
|
Leases |
|
|
Total |
|
Due for payment: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Within 1 year |
|
|
919 |
|
|
|
2,001 |
|
|
|
41 |
|
|
|
2,961 |
|
1 to 2 years |
|
|
- |
|
|
|
10,347 |
|
|
|
37 |
|
|
|
10,384 |
|
2 to 3 years |
|
|
- |
|
|
|
- |
|
|
|
35 |
|
|
|
35 |
|
3 to 4 years |
|
|
- |
|
|
|
- |
|
|
|
33 |
|
|
|
33 |
|
4 to 5 years |
|
|
- |
|
|
|
- |
|
|
|
23 |
|
|
|
23 |
|
Above 5 years |
|
|
- |
|
|
|
- |
|
|
|
133 |
|
|
|
133 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
919 |
|
|
|
12,348 |
|
|
|
302 |
|
|
|
13,569 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2020
US$M |
|
Trade and other payables |
|
|
Payables to BHP Group |
|
|
Leases |
|
|
Total |
|
Due for payment: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Within 1 year |
|
|
771 |
|
|
|
6,533 |
|
|
|
70 |
|
|
|
7,374 |
|
1 to 2 years |
|
|
- |
|
|
|
- |
|
|
|
70 |
|
|
|
70 |
|
2 to 3 years |
|
|
- |
|
|
|
10,347 |
|
|
|
63 |
|
|
|
10,410 |
|
3 to 4 years |
|
|
- |
|
|
|
- |
|
|
|
35 |
|
|
|
35 |
|
4 to 5 years |
|
|
- |
|
|
|
- |
|
|
|
32 |
|
|
|
32 |
|
Above 5 years |
|
|
- |
|
|
|
- |
|
|
|
156 |
|
|
|
156 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
771 |
|
|
|
16,880 |
|
|
|
426 |
|
|
|
18,077 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unaudited
2019 US$M |
|
Trade and other payables |
|
|
Payables to BHP Group |
|
|
Total |
|
Due for payment: |
|
|
|
|
|
|
|
|
|
|
|
|
Within 1 year |
|
|
929 |
|
|
|
6,520 |
|
|
|
7,449 |
|
1 to 2 years |
|
|
- |
|
|
|
3,993 |
|
|
|
3,993 |
|
2 to 3 years |
|
|
- |
|
|
|
- |
|
|
|
- |
|
3 to 4 years |
|
|
- |
|
|
|
10,347 |
|
|
|
10,347 |
|
4 to 5 years |
|
|
- |
|
|
|
- |
|
|
|
- |
|
Above 5 years |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
929 |
|
|
|
20,860 |
|
|
|
21,789 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* Refer to Note 25 New and amended
accounting standards and interpretations. |
Fair value measurement
All financial assets
and financial liabilities are initially recognised at the fair value of consideration paid or received, net of transaction costs as appropriate and subsequently carried at fair value or amortised cost. The financial assets and liabilities are
presented by class in the tables below at their carrying values, which generally approximate to fair values.
42
BHP Petroleum Assets
Notes to the Financial Statements
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
IFRS 13 Fair value hierarchy Level |
|
|
IFRS 9 Classification |
|
|
2021 US$M |
|
|
2020 US$M |
|
|
Unaudited 2019 US$M |
|
Cash and cash equivalents |
|
|
|
|
|
|
Amortised cost |
|
|
|
776 |
|
|
|
325 |
|
|
|
1,398 |
|
Trade and other receivables |
|
|
|
|
|
|
Amortised cost |
|
|
|
1,065 |
|
|
|
785 |
|
|
|
873 |
|
Receivables from BHP Group |
|
|
|
|
|
|
Amortised cost |
|
|
|
5,526 |
|
|
|
12,424 |
|
|
|
15,871 |
|
Other financial assets (1)(2) |
|
|
2,3 |
|
|
|
Fair value through profit or loss |
|
|
|
51 |
|
|
|
93 |
|
|
|
70 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total financial assets |
|
|
|
|
|
|
|
|
|
|
7,418 |
|
|
|
13,627 |
|
|
|
18,212 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trade and other payables |
|
|
|
|
|
|
Amortised cost |
|
|
|
919 |
|
|
|
771 |
|
|
|
929 |
|
Payables to BHP Group |
|
|
|
|
|
|
Amortised cost |
|
|
|
12,348 |
|
|
|
16,880 |
|
|
|
20,860 |
|
Other financial liabilities |
|
|
3 |
|
|
|
Fair value through profit or loss |
|
|
|
9 |
|
|
|
6 |
|
|
|
2 |
|
Interest bearing liabilities |
|
|
|
|
|
|
Amortised cost |
|
|
|
269 |
|
|
|
383 |
|
|
|
17 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total financial liabilities |
|
|
|
|
|
|
|
|
|
|
13,545 |
|
|
|
18,040 |
|
|
|
21,808 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
Includes financial assets of US$51 million (2020:
US$78 million, 2019: US$70 million) categorised as Level 3. Significant items are derivatives embedded in physical commodity purchase and sales contract and contingent consideration receivable. |
|
(2) |
Includes investment in debt security of $0 (2020: US$15 million, 2019: $0) categorised as Level 2.
|
BHP Petroleum uses fair value to measure certain of its assets and liabilities in the combined financial statements. Fair value is the amount that
would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, that is, an exit price from the perspective of a market participant that holds the asset or owes the
liability.
For financial assets and liabilities carried at fair value, BHP Petroleum uses the following to categorise the method used based on the lowest level
input that is significant to the fair value measurement as a whole:
Level 1 Based on quoted process (unadjusted) in active markets for
identical financial assets and liabilities
Level 2 Based on inputs other than quoted prices included within Level 1 that are
observable for financial asset or liability
Level 3 Based on inputs not observable in the market using appropriate valuation models,
including discounted cash flow modelling
If, at inception of a contract, the valuation cannot be supported by observable market data, any gain or loss determined by
the valuation methodology is not recognised in the income statement but deferred on the balance sheet and is commonly known as day-one gain or loss. This deferred gain or loss is recognised in the
income statement over the life of the contract until substantially all the remaining contract term can be valued using observable market data at which point any remaining deferred gain or loss is recognised in the income statement. Changes in
valuation subsequent to the initial valuation at inception of a contract are recognised immediately in the income statement.
The carrying value of Other financial
assets and Other financial liabilities includes an embedded derivative resulting from a physical commodity (gas) purchase and sale contract in Trinidad and Tobago. The carrying value of the embedded derivative at 30 June 2021 was a net
liability of US$4 million (2020: net asset of US$26 million, 2019: net asset of US$23 million).
Within Other financial assets, BHP Petroleum has also
recognised a receivable for contingent consideration of US$46 million for each reporting period. The contingent consideration asset was recognised on sale of an interest in the Scarborough gas project to Woodside Petroleum Limited in 2016.
Where a positive final investment decision is made, a contingent payment of US$150 million will be payable to BHP Petroleum.
43
BHP Petroleum Assets
Notes to the Financial Statements
The valuation techniques used by BHP Petroleum to measure fair value include the use of internally developed
methodologies and models that result in managements best estimate of fair value. Inputs used in the valuation include, but are not limited to, future commodity prices, market discount rates and consideration of risks specific to the asset or
liability being fair valued.
The following table presents the impact of activity for financial instruments classified as Level 3 in the fair value hierarchy as
at 30 June 2021, 2020 and 2019:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2021 US$M |
|
|
2020 US$M |
|
|
Unaudited 2019 US$M |
|
Fair value at beginning of year |
|
|
72 |
|
|
|
68 |
|
|
|
61 |
|
Gains/(losses) recognised in income statement: |
|
|
(10 |
) |
|
|
29 |
|
|
|
22 |
|
Settlements |
|
|
(20 |
) |
|
|
(25 |
) |
|
|
(15 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net fair value at end of year |
|
|
42 |
|
|
|
72 |
|
|
|
68 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18. Employee benefits, restructuring and post-retirement employee benefits provisions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2021 US$M |
|
|
2020 US$M |
|
|
Unaudited 2019 US$M |
|
Employee benefits provisions (1) |
|
|
147 |
|
|
|
121 |
|
|
|
114 |
|
Restructuring provisions (2) |
|
|
31 |
|
|
|
8 |
|
|
|
26 |
|
Post-retirement employee benefits provisions |
|
|
248 |
|
|
|
253 |
|
|
|
246 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total provisions |
|
|
426 |
|
|
|
382 |
|
|
|
386 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprising: |
|
|
|
|
|
|
|
|
|
|
|
|
Current |
|
|
178 |
|
|
|
129 |
|
|
|
140 |
|
Non-current |
|
|
248 |
|
|
|
253 |
|
|
|
246 |
|
|
(1) |
The expenditure associated with total employee benefits will occur in a pattern consistent with when employees choose
to exercise their entitlement to benefits. |
|
(2) |
Total restructuring provisions include provisions for terminations. |
44
BHP Petroleum Assets
Notes to the Financial Statements
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2021
US$M |
|
Employee benefits (1) |
|
|
Restructuring (2) |
|
|
Post- retirement employee benefits |
|
|
Total |
|
At the beginning of the financial year |
|
|
121 |
|
|
|
8 |
|
|
|
253 |
|
|
|
382 |
|
Charge/(credit) for the year: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Underlying |
|
|
144 |
|
|
|
29 |
|
|
|
20 |
|
|
|
193 |
|
Discounting |
|
|
- |
|
|
|
- |
|
|
|
11 |
|
|
|
11 |
|
Net interest expense |
|
|
- |
|
|
|
- |
|
|
|
(4) |
|
|
|
(4) |
|
Exchange variations |
|
|
1 |
|
|
|
- |
|
|
|
- |
|
|
|
1 |
|
Released during the year |
|
|
(18) |
|
|
|
- |
|
|
|
- |
|
|
|
(18) |
|
Remeasurement gains taken to retained earnings |
|
|
- |
|
|
|
- |
|
|
|
(2) |
|
|
|
(2) |
|
Utilisation |
|
|
(101) |
|
|
|
(6) |
|
|
|
(30) |
|
|
|
(137) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At the end of the financial year |
|
|
147 |
|
|
|
31 |
|
|
|
248 |
|
|
|
426 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
The expenditure associated with total employee benefits will occur in a pattern consistent with when employees choose
to exercise their entitlement to benefits. |
|
(2) |
Total restructuring provisions include provisions for terminations. |
Recognition and measurement
Provisions are recognised by BHP
Petroleum when:
|
● |
|
there is a present legal or constructive obligation as a result of past events |
|
● |
|
it is more likely than not that a permanent outflow of resources will be required to settle the obligation
|
|
● |
|
the amount can be reliably estimated and measured at the present value of managements best estimate of the cash
outflow required to settle the obligation at reporting date. |
|
|
|
|
|
Provision |
|
Description
|
|
|
Employee
benefits |
|
Liabilities for annual leave and any accumulating sick leave
accrued up until the reporting date that are expected to be settled within 12 months are measured at the amounts expected to be paid when the liabilities are settled. To the extent uncertain tax and royalty matters give rise to a contingent
liability, an estimate of the potential liability is included within the above total, where it is capable of reliable measurement.
Liabilities for long service leave are measured as the present value of estimated future payments for the services provided by employees up to the
reporting date and disclosed within employee benefits. Liabilities
that are not expected to be settled within 12 months are discounted at the reporting date using market yields of high-quality corporate bonds or government bonds for countries where there is no deep market for corporate bonds. The rates used reflect
the terms to maturity and currency that match, as closely as possible, the estimated future cash outflows.
In relation to industry-based long service leave funds, BHP Petroleums liability, including obligations for funding shortfalls, is determined after
deducting the fair value of dedicated assets of such funds. |
|
|
45
BHP Petroleum Assets
Notes to the Financial Statements
|
|
|
|
|
|
|
Liabilities for unpaid wages and salaries are recognised in other
creditors. |
|
|
Restructuring |
|
Restructuring provisions are recognised when:
- BHP Petroleum has a detailed formal plan identifying the business or part of the
business concerned, the location and approximate number of employees affected, a detailed estimate of the associated costs and an appropriate timeline
- the restructuring has either commenced or been publicly announced and can no longer be withdrawn. Payments falling due greater than 12 months after the reporting date
are discounted to present value. |
|
|
Post-retirement employee benefits
BHP
Petroleum operates or participates in a number of pension (including superannuation) schemes throughout the world. The funding of the schemes complies with local regulations. The assets of the schemes are generally held separately from those of BHP
Petroleum and are administered by trustees or management boards.
|
|
|
|
|
Schemes/Obligations
|
|
Description
|
|
|
Defined contribution pension schemes
and multi-employer pension
schemes |
|
For defined contribution schemes or schemes operated on an industry-wide basis where
it is not possible to identify assets attributable to the participation by our employees, the pension charge is calculated on the basis of contributions payable. BHP Petroleum contributed US$42 million during the financial year (2020:
US$37 million, 2019: US$68 million) to defined contribution plans and multi-employer defined contribution plans. These contributions are expensed as incurred.
|
|
|
Defined benefit pension schemes |
|
For defined benefit pension schemes, the cost of providing pensions is charged to the income
statement so as to recognise current and past service costs, net interest cost on the net defined benefit obligations/plan assets and the effect of any curtailments or settlements. Remeasurement gains and losses are recognised directly in equity. An
asset or liability is consequently recognised in the balance sheet based on the present value of defined benefit obligations less the fair value of plan assets, except that any such asset cannot exceed the present value of expected refunds from and
reductions in future contributions to the plan. Defined benefit obligations are estimated by
discounting expected future payments using market yields at the reporting date on high-quality corporate bonds in countries that have developed corporate bond markets. However, where developed corporate bond markets do not exist, the discount rates
are selected by reference to national government bonds. In both instances, the bonds are selected with terms to maturity and currency that match, as closely as possible, the estimated future cash flows. BHP Petroleum has closed all defined benefit
pension schemes to new entrants. Defined benefit pension schemes remain operating in Australia and the United States for existing members. Full actuarial valuations are prepared and updated annually to 30 June by local actuaries for all schemes. BHP
Petroleum operates final salary schemes (that provide final salary benefits only), non-salary related schemes (that provide flat dollar benefits) and mixed benefit schemes (that consist of a final salary
defined benefit portion and a defined contribution portion). |
|
|
46
BHP Petroleum Assets
Notes to the Financial Statements
|
|
|
|
|
|
|
(that provide flat dollar benefits) and mixed
benefit schemes (that consist of a final salary defined benefit portion and a defined contribution portion). |
|
|
Defined benefit post- retirement medical schemes |
|
BHP Petroleum operates a number of post-retirement
medical schemes in the United States and certain BHP Group companies provide post-retirement medical benefits to qualifying retirees. In some cases, the benefits are provided through medical care schemes to which BHP Group, the employees, the
retirees and covered family members contribute. Full actuarial valuations are prepared by local actuaries for all schemes. These schemes are recognised on the same basis as described for defined benefit pension schemes. All of the post-retirement
medical schemes are unfunded. |
|
|
Risk
BHP Petroleum defined benefit
schemes/obligations expose BHP Petroleum to a number of risks, including asset value volatility, interest rate variations, inflation, longevity and medical expense inflation risk.
Recognising this, BHP Petroleum has adopted an approach of moving away from providing defined benefit pensions. The majority of BHP Petroleums sponsored defined
benefit pension schemes have been closed to new entrants for many years. Existing benefit schemes and the terms of employee participation in these schemes are reviewed on a regular basis.
Actuarial assumptions
Significant actuarial assumptions for the determination
of the defined benefit obligation are discount rate, expected salary increase and mortality. The sensitivity analyses below have been determined based on reasonably possible changes of the respective assumptions occurring at the end of the reporting
period, while holding all other assumptions constant.
The material financial assumptions used to estimate the benefit obligations of the various plans are set out
below. The assumptions are reviewed by management at the end of each year and are used to evaluate the accrued benefit obligation at 30 June and pension expense for the following year.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Defined benefit pension schemes |
|
|
Defined benefit post- retirement medical schemes |
|
|
|
|
|
|
|
|
|
Unaudited |
|
|
|
|
|
|
|
|
Unaudited |
|
|
|
2021 |
|
|
2020 |
|
|
2019 |
|
|
2021 |
|
|
2020 |
|
|
2019 |
|
Key assumptions used to determine benefit obligation: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Discount rate |
|
|
3.09% |
|
|
|
2.51% |
|
|
|
3.47% |
|
|
|
2.56% |
|
|
|
2.40% |
|
|
|
3.27% |
|
Post-retirement health care trend rate - initial |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
4.22% |
|
|
|
4.41% |
|
|
|
4.52% |
|
Post-retirement health care trend rate - ultimate |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
4.03% |
|
|
|
4.06% |
|
|
|
4.08% |
|
47
BHP Petroleum Assets
Notes to the Financial Statements
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Defined benefit pension schemes |
|
|
Defined benefit post- retirement medical schemes |
|
|
|
|
|
|
|
|
|
Unaudited |
|
|
|
|
|
|
|
|
Unaudited |
|
|
|
2021 |
|
|
2020 |
|
|
2019 |
|
|
2021 |
|
|
2020 |
|
|
2019 |
|
Key assumptions used to determine benefit expense: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Discount rate |
|
|
2.51% |
|
|
|
3.48% |
|
|
|
4.11% |
|
|
|
2.40% |
|
|
|
3.27% |
|
|
|
4.00% |
|
Post-retirement health care trend rate - initial |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
4.41% |
|
|
|
4.52% |
|
|
|
4.84% |
|
Post-retirement health care trend rate - ultimate |
|
|
- |
|
|
|
|
|
|
|
- |
|
|
|
4.06% |
|
|
|
4.08% |
|
|
|
4.11% |
|
In addition to the financial assumptions, we regularly review the demographic and mortality assumptions. The mortality assumptions
reflect best practice in the countries in which we provide pensions and have been chosen with regard to applicable published tables adjusted where appropriate to reflect the experience of BHP Petroleum and an extrapolation of past longevity
improvements into the future.
BHP Petroleums most substantial pension liabilities are in the US where mortality assumptions applied are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2021 |
|
|
2020 |
|
|
Unaudited 2019 |
|
Life Expectancy of a Male aged 65 now |
|
|
21.561 |
|
|
|
21.451 |
|
|
|
21.386 |
|
Life Expectancy of a Male aged 65 in 15 years |
|
|
22.458 |
|
|
|
22.358 |
|
|
|
22.303 |
|
Life Expectancy of a Female aged 65 now |
|
|
23.285 |
|
|
|
23.197 |
|
|
|
23.137 |
|
Life Expectancy of a Female aged 65 in 15 years |
|
|
24.116 |
|
|
|
23.379 |
|
|
|
23.984 |
|
Fund assets
BHP Petroleum follows a
coordinated strategy for the funding and investment of its defined benefit pension schemes (subject to meeting all local requirements). BHP Petroleum aims for the value of defined benefit pension scheme assets to be maintained at close to the value
of the corresponding benefit obligations, allowing for some short-term volatility. Scheme assets are invested in a diversified range of asset classes, predominantly comprising bonds and equities.
BHP Petroleum aims to progressively shift defined benefit pension scheme assets towards investments that match the anticipated profile of the benefit obligations, as
funding levels improve, and benefit obligations mature. Over time, this is expected to result in a further reduction in the total exposure of pension scheme assets to equity markets. For pension schemes that pay lifetime benefits, BHP Petroleum may
consider and support the purchase of annuities to back these benefit obligations if it is commercially sensible to do so.
48
BHP Petroleum Assets
Notes to the Financial Statements
Net liability recognised in the Consolidated Balance Sheet
The net liability recognised in the Consolidated Balance Sheet is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Defined benefit pension
schemes/post-employment
obligations |
|
|
Post-retirement medical
schemes |
|
|
|
|
|
|
|
|
|
Unaudited |
|
|
|
|
|
|
|
|
Unaudited |
|
|
|
2021 US$M |
|
|
2020 US$M |
|
|
2019 US$M |
|
|
2021 US$M |
|
|
2020 US$M |
|
|
2019 US$M |
|
Present value of funded defined benefit obligation |
|
|
163 |
|
|
|
172 |
|
|
|
172 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Present value of unfunded defined benefit obligation |
|
|
111 |
|
|
|
97 |
|
|
|
104 |
|
|
|
154 |
|
|
|
166 |
|
|
|
154 |
|
Fair value of defined benefit scheme assets |
|
|
(180) |
|
|
|
(182) |
|
|
|
(184) |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Scheme deficit |
|
|
94 |
|
|
|
87 |
|
|
|
92 |
|
|
|
154 |
|
|
|
166 |
|
|
|
154 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrecognised surplus |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Unrecognised past service credits |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Adjustment for employer contributions tax |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net liability recognised in the Consolidated Balance Sheet |
|
|
94 |
|
|
|
87 |
|
|
|
92 |
|
|
|
154 |
|
|
|
166 |
|
|
|
154 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BHP Petroleum has no legal obligation to settle these liabilities with any immediate contributions or additional one-off contributions. BHP Petroleum intends to continue to contribute to each defined benefit pension and post-retirement medical scheme in accordance with the latest recommendations of each scheme actuary.
Employee share ownership plans
Awards, in the form of the right to receive
ordinary shares in either BHP Group Limited or BHP Group Plc, have been granted under the following employee share ownership plans: Cash and Deferred Plan (CDP), Short-Term Incentive Plan (STIP), Long-Term Incentive Plan (LTIP), Management Award
Plan (MAP), Transitional and Commencement Key Management Personnel awards and the all-employee share plan, Shareplus.
Some
awards are eligible to receive a cash payment, or the equivalent value in shares, equal to the dividend amount that would have been earned on the underlying shares awarded to those participants (the Dividend Equivalent Payment, or DEP). The DEP is
provided to the participants once the underlying shares are allocated or transferred to them. Awards under the plans do not confer any rights to participate in a share issue; however, there is discretion under each of the plans to adjust the awards
in response to a variation in the share capital of BHP Group Limited or BHP Group Plc.
Employee share awards pre-tax expense
is US$36 million (2020: US$39 million, 2019: US$45 million).
49
BHP Petroleum Assets
Notes to the Financial Statements
Fair value and assumptions in the calculation of fair value for awards issued
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2021 |
|
Closing number of shares at the end of the financial year |
|
|
Weighted average fair value of awards granted during the year US$ |
|
|
Risk-free interest rate |
|
|
Estimated life of awards |
|
|
Share price at grant date |
|
|
Estimated volatility of share price |
|
|
Dividend yield |
|
BHP Group Limited |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CDP awards |
|
|
50,980 |
|
|
|
25.28 |
|
|
|
n/a |
|
|
|
2 and 5 years |
|
|
|
A$35.90 |
|
|
|
n/a |
|
|
|
n/a |
|
STIP awards |
|
|
6,628 |
|
|
|
25.28 |
|
|
|
n/a |
|
|
|
2 years |
|
|
|
A$35.90 |
|
|
|
n/a |
|
|
|
n/a |
|
LTIP awards (1) |
|
|
328,709 |
|
|
|
14.68 |
|
|
|
0.25% |
|
|
|
5 years |
|
|
|
A$35.90/A$33.81/A$38.56 |
|
|
|
28.0% |
|
|
|
n/a |
|
MAP awards (2) |
|
|
3,867,213 |
|
|
|
22.88 |
|
|
|
n/a |
|
|
|
1-5 years |
|
|
|
A$38.36/A$36.91/A$35.90/A$45.88 |
|
|
|
n/a |
|
|
|
4.90% |
|
Shareplus |
|
|
333,738 |
|
|
|
28.35 |
|
|
|
0.21% |
|
|
|
3 years |
|
|
|
A$30.19 |
|
|
|
n/a |
|
|
|
5.59% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BHP Group Plc |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareplus |
|
|
481 |
|
|
|
15.32 |
|
|
|
0.12% |
|
|
|
3 years |
|
|
|
£12.11 |
|
|
|
n/a |
|
|
|
6.40% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
Includes LTIP awards granted on 20 October 2020, 2 November 2020 and 1 December 2020.
|
|
(2) |
Includes MAP awards granted on 21 August 2020, 24 September 2020, 20 October 2020 and 7 April 2021.
|
Recognition and measurement
The fair value at grant
date of equity-settled share awards is charged to the income statement over the period for which the benefits of employee services are expected to be derived. The fair values of awards granted were estimated using a Monte Carlo simulation
methodology and Black-Scholes option pricing technique and consider the following factors:
|
● |
|
expected life of the award |
|
● |
|
current market price of the underlying shares |
|
● |
|
expected volatility using an analysis of historic volatility over different rolling periods. For the LTIP, it is
calculated for all sector comparators and the published MSCI World index |
|
● |
|
risk-free interest rate, which is an applicable government bond rate |
|
● |
|
market-based performance hurdles |
Where awards are forfeited because non-market-based vesting conditions are not satisfied, the expense previously recognised is
proportionately reversed.
The tax effect of awards granted is recognised in income tax expense, except to the extent that the total tax deductions are expected to
exceed the cumulative remuneration expense. In this situation, the excess of the associated current or deferred tax is recognised in equity and forms part of the employee share awards reserve. The fair value of awards as presented in the tables
above represents the fair value at grant date.
50
BHP Petroleum Assets
Notes to the Financial Statements
In respect of employee share awards, BHP Group utilises the Billiton Employee Share Ownership Trust and the BHP Billiton
Limited Employee Equity Trust. The trustees of these trusts are independent companies, resident in Jersey. The trusts use funds provided by BHP Group to acquire ordinary shares to enable awards to be made or satisfied. The ordinary shares may be
acquired by purchase in the market or by subscription at not less than nominal value. These entities are outside BHP Petroleum boundary and are not included as part of BHP Petroleums combined financial statements.
19. Subsidiaries
BHP Petroleums financial statements include the
combination of subsidiaries as described in Note 1 Organisation and summary of significant accounting policies.
Significant subsidiaries are those with
the most significant contribution to BHP Petroleums net profit or net assets. BHP Petroleums interest in significant subsidiaries results is listed in the table below:
|
|
|
Significant subsidiaries |
|
Country of incorporation |
BHP (Trinidad-3A) Ltd |
|
Trinidad and Tobago |
BHP Billiton (Trinidad-2C) Ltd. |
|
Canada |
BHP Petroleum (Australia) Pty Ltd |
|
Australia |
BHP Billiton Petroleum (Deepwater) Inc. |
|
US |
BHP Petroleum (International Exploration) Pty Ltd |
|
Australia |
BHP Petroleum (Bass Strait) Pty Ltd |
|
Australia |
BHP Petroleum (North West Shelf) Pty Ltd |
|
Australia |
BHP Petroleums interest in these significant subsidiaries in FY2021, FY2020 and FY2019 was 100 per cent and the principal
activity of each significant subsidiary was primarily hydrocarbon exploration and production.
51
BHP Petroleum Assets
Notes to the Financial Statements
20. Interests in joint operations
Significant joint operations of BHP Petroleum are those with the most significant contributions to its net profit or net assets. BHP Petroleums interest in the
significant joint operations, whose principal activities are primarily hydrocarbon production, results are listed in the table below.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Significant joint operations |
|
Country of operation |
|
Principal activity |
|
2021 % |
|
|
2020 % |
|
|
2019 % |
|
Atlantis |
|
US |
|
Hydrocarbon production |
|
|
44 |
|
|
|
44 |
|
|
|
44 |
|
Bass Strait |
|
Australia |
|
Hydrocarbon production |
|
|
50 |
|
|
|
50 |
|
|
|
50 |
|
Macedon (1) |
|
Australia |
|
Hydrocarbon production |
|
|
71 |
|
|
|
71 |
|
|
|
71 |
|
Mad Dog |
|
US |
|
Hydrocarbon production |
|
|
24 |
|
|
|
24 |
|
|
|
24 |
|
North West Shelf |
|
Australia |
|
Hydrocarbon production |
|
|
12.5-16.67 |
|
|
|
12.5-16.67 |
|
|
|
12.5-16.67 |
|
Pyrenees (1) |
|
Australia |
|
Hydrocarbon production |
|
|
40-71.43 |
|
|
|
40-71.43 |
|
|
|
40-71.43 |
|
ROD Integrated Development (2) Algeria |
|
|
|
Hydrocarbon production |
|
|
29 |
|
|
|
30 |
|
|
|
30 |
|
Shenzi (3) |
|
US |
|
Hydrocarbon production |
|
|
72 |
|
|
|
44 |
|
|
|
44 |
|
Trinidad and Tobago (1)(4) |
|
Trinidad and Tobago |
|
Hydrocarbon production |
|
|
45-68.46 |
|
|
|
45-68.46 |
|
|
|
45-68.46 |
|
|
(1) |
While BHP Petroleum may hold a greater than 50 per cent interest in these joint operations, all the participants in
these joint operations approve the operating and capital budgets and therefore BHP Petroleum has joint control over the relevant activities of these arrangements. |
|
(2) |
BHP Petroleums interest reflects the working interest and may vary year-on-year based on BHP Petroleums effective interest in producing wells. |
|
(3) |
Relates to BHP Petroleums acquisition of an additional 28 per cent working interest in Shenzi.
|
|
(4) |
Trinidad and Tobago joint operations include Greater Angostura and Ruby. |
Shenzi Acquisition
In November 2020, BHP Petroleum finalised a membership
interest purchase and sale agreement to acquire an additional 28 per cent working interest in Shenzi. The transaction was completed on 6 November 2020 for a purchase price of US$480 million after customary post-closing adjustments.
Shenzi continues to be accounted for as a joint operation because BHP Petroleum continues to have joint decision-making rights with the other joint venture partner.
The assets and liabilities related to the acquired interests have been accounted for in line with the principles of IFRS 3 Business Combinations with no
remeasurement of BHP Petroleums previous interest. The acquisition resulted in increases to property, plant and equipment of US$642 million, inventory of US$17 million and closure and rehabilitation liabilities of
US$179 million. Fair value of the identifiable assets and liabilities approximate the consideration paid and therefore no goodwill or bargain purchase gain has been recognised for the acquisition. The acquisition of an additional 28 per
cent working interest in Shenzi since November 2020 contributed US$136 million of revenue and US$48 million to profit before tax of BHP Petroleum in FY2021. If the acquisition had taken place at the beginning of the financial year, revenue
for BHP Petroleum would have been US$3,952 million and loss before tax for BHP Petroleum would have been US$183 million.
52
BHP Petroleum Assets
Notes to the Financial Statements
BHP Petroleums share of assets held in joint operations subject to significant restrictions are as
follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2021 US$M |
|
|
2020 US$M |
|
|
Unaudited 2019 US$M |
|
Current assets |
|
|
866 |
|
|
|
804 |
|
|
|
751 |
|
Non-current assets |
|
|
12,255 |
|
|
|
11,516 |
|
|
|
10,943 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets (1) |
|
|
13,121 |
|
|
|
12,320 |
|
|
|
11,694 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
While BHP Petroleum is unrestricted in its ability to sell a share of its interest in these joint operations, it does
not have the right to sell individual assets that are used in these joint operations without the unanimous consent of the other participants. The assets in these joint operations are also restricted to the extent that they are only available to be
used by the joint operation itself and not by other operations of BHP Petroleum. |
21. Investments in associates
Ownership interest for BHP Petroleums investments in associates, which are operated in the US, are listed in the table below:
|
|
|
|
|
|
|
|
|
Associates |
|
Principal activity |
|
Reporting date |
|
Ownership interest % (1) |
|
Caesar Oil Pipeline Company LLC (COP) |
|
Hydrocarbons transportation |
|
31 December |
|
|
25 |
|
Cleopatra Gas Gathering Company LLC (CGG) |
|
Hydrocarbons transportation |
|
31 December |
|
|
22 |
|
Marine Well Containment Company LLC (MWCC) |
|
Oil spill services |
|
31 December |
|
|
10 |
|
|
(1) |
Reflects BHP Petroleums ownership interest at 30 June 2021, 2020 and 2019. |
BHP Petroleum is restricted in its ability to make dividend payments from its investments in associates as any such payments require the approval of all investors in the
associates. There has been no change in BHP Petroleums ownership interest in the associates for any of the reporting periods covered by these combined financial statements. When the annual financial reporting date is different to BHP
Petroleums, financial information is obtained as at 30 June in order to report on an annual basis consistent with BHP Petroleums reporting date.
The movement for the year in BHP Petroleums net investments in associates is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2021 US$M |
|
|
2020 US$M |
|
|
Unaudited 2019 US$M |
|
At the beginning of the financial year |
|
|
245 |
|
|
|
239 |
|
|
|
249 |
|
Loss from investments in associates |
|
|
(6) |
|
|
|
(4) |
|
|
|
(2) |
|
Investment in associates |
|
|
25 |
|
|
|
22 |
|
|
|
6 |
|
Dividends received from associates |
|
|
(11) |
|
|
|
(12) |
|
|
|
(14) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At the end of the financial year |
|
|
253 |
|
|
|
245 |
|
|
|
239 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
53
BHP Petroleum Assets
Notes to the Financial Statements
The following table summarises the financial information relating to each of BHP Petroleums significant equity
accounted investments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
COP |
|
|
|
|
|
|
|
|
CGG |
|
|
|
|
|
|
|
|
MWCC |
|
|
|
|
|
|
2021 US$000 |
|
|
2020 US$000 |
|
|
Unaudited 2019 US$000 |
|
|
2021 US$000 |
|
|
2020 US$000 |
|
|
Unaudited 2019 US$000 |
|
|
2021 US$000 |
|
|
2020 US$000 |
|
|
Unaudited 2019 US$000 |
|
Current assets |
|
|
7,873 |
|
|
|
10,090 |
|
|
|
8,758 |
|
|
|
7,102 |
|
|
|
6,414 |
|
|
|
6,076 |
|
|
|
25,145 |
|
|
|
22,147 |
|
|
|
16,935 |
|
Non-current assets |
|
|
199,335 |
|
|
|
202,082 |
|
|
|
212,006 |
|
|
|
206,496 |
|
|
|
211,909 |
|
|
|
223,265 |
|
|
|
1,565,938 |
|
|
|
1,619,219 |
|
|
|
1,545,412 |
|
Current liabilities |
|
|
(1,262) |
|
|
|
(2,344) |
|
|
|
(479) |
|
|
|
(198) |
|
|
|
(174) |
|
|
|
(187) |
|
|
|
(14,414) |
|
|
|
(16,938) |
|
|
|
(28,992) |
|
Non-current liabilities |
|
|
- |
|
|
|
- |
|
|
|
(7,512) |
|
|
|
- |
|
|
|
- |
|
|
|
(5,944) |
|
|
|
(273,446) |
|
|
|
(262,143) |
|
|
|
(153,890) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Assets |
|
|
205,946 |
|
|
|
209,828 |
|
|
|
212,773 |
|
|
|
213,400 |
|
|
|
218,149 |
|
|
|
223,210 |
|
|
|
1,303,223 |
|
|
|
1,362,285 |
|
|
|
1,379,465 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net assets Company share |
|
|
51,486 |
|
|
|
52,457 |
|
|
|
53,193 |
|
|
|
46,948 |
|
|
|
47,993 |
|
|
|
49,106 |
|
|
|
130,322 |
|
|
|
136,229 |
|
|
|
137,947 |
|
Adjustments for difference between US GAAP and IFRS |
|
|
(1,493) |
|
|
|
(536) |
|
|
|
(252) |
|
|
|
(1,046) |
|
|
|
(286) |
|
|
|
(117) |
|
|
|
26,748 |
|
|
|
9,536 |
|
|
|
(1,049) |
|
Carrying amount of investment |
|
|
49,993 |
|
|
|
51,921 |
|
|
|
52,941 |
|
|
|
45,902 |
|
|
|
47,707 |
|
|
|
48,989 |
|
|
|
157,070 |
|
|
|
145,765 |
|
|
|
136,898 |
|
Revenue 100% |
|
|
36,028 |
|
|
|
40,988 |
|
|
|
46,897 |
|
|
|
18,048 |
|
|
|
21,178 |
|
|
|
25,827 |
|
|
|
41,042 |
|
|
|
54,204 |
|
|
|
63,441 |
|
Profit/(loss) 100% |
|
|
22,691 |
|
|
|
28,288 |
|
|
|
35,264 |
|
|
|
6,694 |
|
|
|
12,271 |
|
|
|
22,028 |
|
|
|
(135,877) |
|
|
|
(135,600) |
|
|
|
(154,883) |
|
Profit/(loss) Company share |
|
|
5,673 |
|
|
|
7,072 |
|
|
|
8,816 |
|
|
|
1,473 |
|
|
|
2,700 |
|
|
|
4,846 |
|
|
|
(13,588) |
|
|
|
(13,560) |
|
|
|
(15,488) |
|
Dividends received |
|
|
7,600 |
|
|
|
8,093 |
|
|
|
8,950 |
|
|
|
3,278 |
|
|
|
3,982 |
|
|
|
4,906 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Contributions |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
24,893 |
|
|
|
22,427 |
|
|
|
5,382 |
|
22. Related party transactions
BHP Petroleum
has a related party relationship with key management personnel, equity accounted investments (see Note 21 Investments in associates) and entities under common control of BHP Group.
Transactions with key management personnel
Key management personnel includes
roles which have the authority and responsibility for planning, directing and controlling the activities of BHP Petroleum. The compensation for key management personnel for the years ended 30 June 2021, 2020 and 2019 are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2021 US$ |
|
|
2020 US$ |
|
|
Unaudited 2019 US$ |
|
Short-term employee benefits |
|
|
6,679,429 |
|
|
|
8,526,547 |
|
|
|
10,086,495 |
|
Post-employment benefits |
|
|
701,596 |
|
|
|
1,009,198 |
|
|
|
1,116,154 |
|
Share-based payments |
|
|
2,492,766 |
|
|
|
3,511,720 |
|
|
|
4,259,619 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
9,873,791 |
|
|
|
13,047,465 |
|
|
|
15,462,268 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
54
BHP Petroleum Assets
Notes to the Financial Statements
Transactions with equity accounted investments
The following transactions took place during the year with equity accounted investments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2021 US$M |
|
|
2020 US$M |
|
|
Unaudited 2019 US$M |
|
Purchases of goods/services |
|
|
16 |
|
|
|
20 |
|
|
|
23 |
|
Dividends received |
|
|
11 |
|
|
|
12 |
|
|
|
14 |
|
Outstanding balances with related parties
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity Accounted Investments |
|
|
BHP Group Entities |
|
|
|
2021 US$M |
|
|
2020 US$M |
|
|
Unaudited 2019 US$M |
|
|
2021 US$M |
|
|
2020 US$M |
|
|
Unaudited 2019 US$M |
|
Amounts payable to BHP Group |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
12,348 |
|
|
|
16,880 |
|
|
|
20,860 |
|
Trade amounts owing from related parties |
|
|
2 |
|
|
|
1 |
|
|
|
2 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Amounts receivable from BHP Group |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
5,526 |
|
|
|
12,424 |
|
|
|
15,871 |
|
BHP Petroleum has a financing arrangement with BHP Group for short-term cash management. As at 30 June 2021 amount receivable from
BHP Group related to these financing arrangements was US$5,526 million (2020: US$12,424 million, 2019: US$ 15,871 million). These amounts are included in receivables from BHP Group on the balance sheet. As at 30 June 2021 amounts
payable to BHP Group related to this was US$2,001 million (2020: US$2,540 million, 2019: US$3,520 million).
BHP Petroleum also entered into long-term debt
agreements with BHP Group to finance its projects. The current portion of the long-term debt is recorded on the balance sheet under current liabilities in Payables to BHP Group. The current portion of long-term debt as at 30 June 2021 was $0
(2020: US$3,993 million, 2019: US$3,000 million). The non-current portion of the long-term debt is recorded on the balance sheet under non-current liabilities in
Payables to BHP Group. The non-current portion of long-term debt as at 30 June 2021 was US$ 10,347 million (2020: US$ 10,347 million, 2019: US$ 14,340 million). Interest expense related to the
long-term debt is recorded in Finance expense in the income statement. Interest expense related to the long-term debt for the year ended 30 June 2021 was US$267 million (2020:US$622 million, 2019:US$822 million). The long-term debt
agreements with BHP Group are entered at 3-month USD LIBOR plus margin. The margin ranges between 1.3 per cent and 1.8 per cent. The long-term debt agreements have a maturity date between November
2022 and December 2022.
There are no expected credit losses related to balances from related parties at 30 June 2021, 2020 and 2019.
BHP Petroleum has entered various performance and corporate guarantees with certain BHP Group entities in the normal course of business. At 30 June 2021, BHP
Petroleum had outstanding guarantees as follows:
Guarantees provided by BHP Petroleum:
|
● |
|
corporate guarantee given to financial institutions that manage future trades in order to hedge oil and gas production
with maximum exposure of US$1 million |
Guarantees received by BHP Petroleum:
|
● |
|
corporate guarantee received for regulatory requirements for drilling in the amount of US$20 million
|
55
BHP Petroleum Assets
Notes to the Financial Statements
|
● |
|
corporate guarantee received for exploration licenses in the amount of US$232 million |
|
● |
|
corporate guarantee received for Outer Continental Shelf Right of Way Grade Bond in the amount of US$3.3 million
|
|
● |
|
corporate guarantee received for plugging and abandonment of well in the amount of US$12 million
|
The likelihood of these performance and corporate guarantees being called upon is considered remote.
23. Significant entities of BHP Petroleum
As disclosed in
Note 1 Organisation and summary of significant accounting policies the combined financial statements include financial information that is limited to the legal entities carved out from BHP Group Limited. A listing of subsidiaries of BHP
Petroleum, included as part of the Proposed Transaction boundary are detailed below. For subsidiaries and joint operations that most significantly contribute to BHP Petroleums net profit and net assets refer to Note 19
Subsidiaries, Note 20 Interest in joint operations.
|
Wholly owned subsidiaries |
Country of Incorporation
Australia |
Registered office address
125 St Georges Terrace, Perth, WA 6000, Australia |
Company Name |
BHP Billiton Petroleum Holdings LLC |
BHP Petroleum (Australia) Pty Ltd |
BHP Petroleum (Bass Strait) Pty Ltd |
BHP Petroleum (International Exploration) Pty Ltd |
BHP Petroleum (North West Shelf) Pty Ltd |
BHP Petroleum Investments (Great Britain) Pty Ltd |
BHP Petroleum Pty Ltd |
Bermuda |
Victoria Place, 31 Victoria Street, Hamilton, HM 10, Bermuda |
BHP Petroleum (Tankers) Limited |
|
Canada |
4500 Bankers Hall East, 855-2nd Street S.W., Calgary, Alberta, T2P
4K7, Canada BHP |
Billiton (Trinidad-2C) Ltd. |
|
Canada |
1741 Lower Water Street, Suite 600, Halifax NS B3J 0J2, Canada |
BHP Petroleum (New Ventures) Corporation |
|
Saint Lucia |
Pointe Seraphine, Castries, St Lucia |
BHP (Trinidad) Holdings Ltd. |
|
Trinidad |
Invaders Bay Tower, Invaders Bay, off Audrey Jeffers Highway, Port of Spain, Trinidad, Trinidad and
Tobago |
BHP (Trinidad-3A) Ltd |
56
BHP Petroleum Assets
Notes to the Financial Statements
|
United Kingdom |
Nova South, 160 Victoria Street, London, England, SW1E 5LB, United Kingdom |
BHP Petroleum (Trinidad Block 23A) Limited |
BHP Petroleum (Trinidad Block 28) Limited |
BHP Petroleum (Mexico) Limited |
BHP Petroleum (Carlisle Bay) |
BHP Petroleum (Egypt) Limited |
BHP Billiton Petroleum Limited
|
United States |
Suite B, 1675 South State Street, Dover, DE, 19901, United States of America |
BHP Billiton Petroleum Holdings LLC |
BHP Resources Inc. |
BHP Billiton Petroleum (Americas) Inc. |
BHP Billiton Petroleum (GOM) Inc. |
Hamilton Brothers Petroleum Corporation |
Hamilton Oil Company Inc. |
BHP Billiton Bolivianna de Petroleo Inc. |
BHP Petroleum (Arkansas Holdings) LLC |
BHP Petroleum (Foreign Exploration Holdings) LLC |
BHP Petroleum (North America) LLC |
BHP Holdings (Resources) Inc |
BHP Billiton Marketing Inc. |
Broken Hill Proprietary (USA) Inc |
BHP Billiton Petroleum (Deepwater) Inc. |
BHP Petroleum (Mexico Holdings) LLC |
BHP Petroleum (Trinidad Block 3) Limited |
BHP Petroleum (Trinidad Block 6) Limited |
BHP Petroleum (Trinidad Block 14) Limited |
BHP Billiton Petroleum (Trinidad Block 23B) Limited |
BHP Petroleum (Trinidad Block 29) Limited |
BHP Billiton Petroleum (South Africa 3B/4B) Limited |
BHP Petroleum (Trinidad Block 5) Limited |
BHP Billiton Petroleum (Trinidad Block 7) Limited |
|
United States |
1188 Bishop Street, Suite 2212, Honolulu, HI 96813, United States of America |
BHP Hawaii Inc. |
Subsidiaries where effective interest
is less than 100% |
Country of Incorporation
Brazil |
Registered office address
Avenida Rio Branco, No. 110, room 901, Centro, Rio de Janeiro, 20040-001,
Brazil |
Company Name |
BHP Billiton Brasil Investimentos de Petróleo Ltda. |
BHP Billiton Brasil Exploração e Produção de Petróleo
Limitada |
57
BHP Petroleum Assets
Notes to the Financial Statements
|
Mexico |
Av. Ejercito Nacional #769, Torre B, Piso 3, Colonia Granada, Alcadia Miguel Hidalgo, Ciudad de Mexico,
11520, Mexico |
Perdido Mexico Pipeline Holdings, S.A. de C.V. |
Perdido Mexico Pipeline, S. de R.L. de C.V. |
BHP Billiton Petróleo Holdings de México, S. de R.L. de C.V. |
BHP Billiton Petróleo Servicios Administrativos, S. de R.L. de C.V. |
Operaciones Conjuntas, S. de R.L. de C.V. |
BHP Billiton Petróleo Servicios de México, S. de R.L. de C.V. |
BHP Billiton Petróleo Operaciones de México, S. de R.L. de C.V. |
|
United States |
Suite B, 1675 South State Street, Dover, DE, 19901, United States of America |
BHP Billiton Petroleum Holdings (USA) Inc. |
Joint Operations |
Australia |
Registered office address
Level 16, Alluvion Building, 58 Mounts Bay Road, Perth, WA 6000, Australia |
Company Name |
North West Shelf Liaison Company Pty Ltd |
North West Shelf Shipping Service Company Pty Ltd |
North West Shelf Gas Pty Limited |
North West Shelf Lifting Coordinator Pty Ltd |
China Administration Company Pty Ltd |
Associates |
United States |
Registered office address
1209 Orange Street, Wilmington, DE, 19801, United States of America |
Company Name |
Caesar Oil Pipeline Company LLC |
Cleopatra Gas Gathering Company LLC |
|
United States |
9807 Katy Freeway, Suite 1200, Houston, TX, 77024, United States of America |
Marine Well Containment Company LLC |
24. Discontinued operations (Onshore US assets)
On 28 September 2018, BHP Petroleum completed the sale of 100 per cent of the issued share capital of BHP Billiton Petroleum (Arkansas) Inc. and 100 per
cent of the membership interests in BHP Billiton Petroleum (Fayetteville) LLC, which held the Fayetteville assets, for a gross cash consideration of US$0.3 billion.
On 31 October 2018, BHP Petroleum completed the sale of 100 per cent of the issued share capital of Petrohawk Energy Corporation, the subsidiary which held the
Eagle Ford (being Black Hawk and Hawkville), Haynesville and Permian assets, for a gross cash consideration of US$10.3 billion (net of preliminary customary completion adjustments of US$0.2 billion). Results from the Onshore US assets are
disclosed as Discontinued operations.
58
BHP Petroleum Assets
Notes to the Financial Statements
While the effective date at which the right to economic profits transferred to the purchasers was 1 July 2018, BHP
Petroleum continued to control the Onshore US assets until the completion dates of their respective transactions. As such BHP Petroleum continued to recognise its share of revenue, expenses, net finance costs and associated income tax expense
related to the operation until the completion date. In addition, BHP Petroleum provided transitional services to the buyer, which ceased in July 2019.
The
completion adjustments included a reduction in sale proceeds, based on the operating cash generated and retained by BHP Petroleum in the period prior to completion, in order to transfer the economic profits from 1 July 2018 to completion date
to the buyers. Therefore, the pre-tax profit from operating the assets is largely offset by a pre-tax loss on disposal. Accordingly, the net loss from discontinued
operations predominantly relates to incremental costs arising as a consequence of the divestment, including restructuring costs and provisions for surplus office accommodation and tax expenses largely triggered by the completion of the transactions.
The contribution of Discontinued operations included within BHP Petroleums profit and cash flows are detailed below:
Income statement Discontinued operations
|
|
|
|
|
|
|
Unaudited 2019 US$M |
|
Revenue |
|
|
851 |
|
Other income |
|
|
94 |
|
Expenses excluding net finance costs |
|
|
(729) |
|
|
|
|
|
|
|
|
|
|
|
Profit/(loss) from operations |
|
|
216 |
|
|
|
|
|
|
Financial expenses |
|
|
(8) |
|
|
|
|
|
|
Net finance costs |
|
|
(8) |
|
|
|
|
|
|
Profit/(loss) before taxation |
|
|
208 |
|
|
|
|
|
|
Income tax (expense)/benefit |
|
|
(33) |
|
|
|
|
|
|
Profit/(loss) after taxation from operating activities |
|
|
175 |
|
|
|
|
|
|
Net loss on disposal |
|
|
(510) |
|
|
|
|
|
|
Loss after taxation |
|
|
(335) |
|
|
|
|
|
|
Attributable to non-controlling interests |
|
|
7 |
|
Attributable to BHP Petroleum |
|
|
(342) |
|
|
|
|
|
|
The total comprehensive income attributable to BHP Petroleum from Discontinued operations was a loss of US$342 million in 2019.
Cash flows from Discontinued operations
|
|
|
|
|
|
|
Unaudited 2019 US$M |
|
Net operating cash flows |
|
|
474 |
|
Net investing cash flows
(1) |
|
|
(443) |
|
Net financing cash flows
(2) |
|
|
(13) |
|
|
|
|
|
|
Net increase/(decrease) in cash and cash equivalents from Discontinued operations |
|
|
18 |
|
|
|
|
|
|
Net proceeds received from the sale of Onshore US |
|
|
10,531 |
|
Less Cash and cash equivalents |
|
|
(104) |
|
|
|
|
|
|
Proceeds from divestment of Onshore US, net of its cash |
|
|
10,427 |
|
|
|
|
|
|
Total cash impact |
|
|
10,445 |
|
|
|
|
|
|
|
(1) |
Includes purchases of property, plant and equipment of US$443 million. |
|
(2) |
Includes net repayment of interest bearing liabilities of US$6 million and dividends paid to non-controlling interests of US$7 million. |
59
BHP Petroleum Assets
Notes to the Financial Statements
Net loss on disposal of Discontinued operations
Details of the net loss on disposal is presented below:
|
|
|
|
|
|
|
Unaudited 2019 US$M |
|
Assets |
|
|
|
|
Cash and cash equivalents |
|
|
104 |
|
Trade and other receivables |
|
|
562 |
|
Other financial assets |
|
|
31 |
|
Inventories |
|
|
34 |
|
Property, plant and equipment |
|
|
10,998 |
|
Intangible assets |
|
|
667 |
|
|
|
|
|
|
Total assets |
|
|
12,396 |
|
|
|
|
|
|
Liabilities |
|
|
|
|
Trade and other payables |
|
|
794 |
|
Provisions |
|
|
491 |
|
|
|
|
|
|
Total liabilities |
|
|
1,285 |
|
|
|
|
|
|
Net assets |
|
|
11,111 |
|
|
|
|
|
|
Less non-controlling interest share of net assets disposed |
|
|
(168) |
|
|
|
|
|
|
BHP Petroleums of net assets disposed |
|
|
10,943 |
|
|
|
|
|
|
Gross consideration |
|
|
10,555 |
|
Less transaction costs |
|
|
(54) |
|
Income tax expense |
|
|
(68) |
|
|
|
|
|
|
Net loss on disposal |
|
|
(510) |
|
|
|
|
|
|
25. New and amended accounting standards and interpretations
BHP Petroleum adopted IFRS 16 Leases (IFRS 16) in BHP Petroleums Financial Statements from 1 July 2019. The adoption of other new
or amended accounting standards or interpretations applicable from 1 July 2019, including IFRIC 23 Uncertainty over Income Tax Treatment, did not have a significant impact on BHP Petroleums Financial Statements.
BHP Petroleum has also early adopted amendments to IFRS 9 Financial Instruments (IFRS 9) and IFRS 7 Financial Instruments:
Disclosures (IFRS 7) in relation to Interest Rate Benchmark Reform.
IFRS 16 Leases
IFRS 16 replaces IAS 17 Leases (IAS 17) including associated interpretative guidance and covers the recognition, measurement, presentation
and disclosures of leases in the Financial Statements of both lessees and lessors.
60
BHP Petroleum Assets
Notes to the Financial Statements
Transition impact
IFRS 16 became effective for BHP Petroleum from 1 July 2019 and BHP Petroleum elected to apply the modified retrospective transition approach, with
no restatement of comparative financial information. For existing finance leases, the right-of-use asset and lease liability on transition was the IAS 17 carrying
amounts as at 30 June 2019. BHP Petroleum did not recognise any finance leases as at 30 June 2019.
As allowed by IFRS 16, BHP Petroleum
has elected:
|
|
|
except for existing finance leases, to measure the
right-of-use asset on transition at an amount equal to the lease liability (as adjusted for prepaid or accrued lease payments); |
|
|
|
not to recognise low-value or short-term leases on the balance sheet;
|
|
|
|
to only recognise, within the lease liability, the lease component of contracts that include non-lease components and other services; |
|
|
|
to adjust the carrying amount of
right-of-use assets on transition for related onerous lease provisions that were recognised on BHP Petroleums balance sheet as at 30 June 2019.
|
Adoption of IFRS 16 resulted in an increase in interest bearing liabilities of US$438 million,
right-of-use assets of US$361 million and net adjustments to other assets and liabilities of US$36 million at 1 July 2019. The weighted average
incremental borrowing rate applied to BHP Petroleums additional lease liabilities at 1 July 2019 was 2.3 per cent taking into account the currency, tenor and location of each lease.
The following table provides a reconciliation of the operating lease commitments disclosed as at 30 June 2019 the total lease liability recognised
at 1 July 2019:
|
|
|
|
|
|
|
Unaudited US$M |
|
Operating lease commitments as at 30 June 2019 |
|
|
402 |
|
Add: Leases which did not meet the definition of a lease under IAS 17 |
|
|
1 |
|
Add: Cost of reasonably certain extension options (discounted) |
|
|
91 |
|
Less: Components excluded from lease liability (undiscounted) |
|
|
(5) |
|
Less: Effect of discounting |
|
|
(51) |
|
|
|
|
|
|
Total additional lease liabilities recognised at 1 July 2019 |
|
|
438 |
|
|
|
|
|
|
BHP Petroleums activities as a lessor are not material and hence there is no significant impact on the Financial
Statements on adoption of IFRS 16.
26. Subsequent events
In November
2021, BHP Group Limited (BHP) and Woodside Petroleum Ltd (Woodside) signed a binding share sale agreement for the merger of BHPs oil and gas portfolio with Woodside. Woodside will acquire the entire share capital of BHP Petroleum International
Pty Ltd in exchange for new Woodside shares. The merger is expected to be completed during the first half of calendar year 2022.
In November 2021, the BHP Group
approved US$1.5 billion in capital expenditure for development of the Scarborough upstream project located in the North Carnarvon Basin, Western Australia. A final investment decision has also been made by Woodside which has triggered a
US$150 million payment to BHP Petroleum (North West Shelf) Pty Ltd (a wholly owned subsidiary of BHP Petroleum) by Woodside, in accordance with the terms of the 2016 divestment of BHPs 25 per cent Scarborough Joint Venture interest
to Woodside.
61
BHP Petroleum Assets
Notes to the Financial Statements
The approved capital expenditure represents BHPs 26.5 per cent participating interest in Phase 1 of the
upstream development. Woodside holds the remaining 73.5 per cent interest and is the operator of the project.
Other than the matters outlined above, no matters
or circumstances have arisen since the end of the financial year that have significantly affected, or may significantly affect, the operations, results of operations or state of affairs in subsequent accounting periods of BHP Petroleum.
62
1. Supplementary oil and gas information unaudited
In accordance with the requirements of the Financial Accounting Standards Board (FASB) Accounting Standard Codification Extractive Activities-Oil and Gas (Topic 932) and SEC requirements set out in Subpart 1200 of Regulation S-K, BHP Petroleum is presenting certain disclosures about its oil and gas
activities. These disclosures are presented below as supplementary oil and gas information, in addition to information relating to the reserves and production of BHP Petroleum disclosed in the registration statement to which these financial
statements are attached.
The information set out in this section is referred to as unaudited as it is not included in the scope of the audit
opinion of the independent auditor on BHP Petroleums combined financial statements.
Reserves and production
Proved oil and gas reserves and net crude oil and condensate, natural gas, LNG and NGL production information for BHP Petroleum is included in the
registration statement to which these financial statements are attached.
Capitalised costs relating to oil and gas production activities
The following table shows the aggregate capitalised costs relating to oil and gas exploration and production activities and related accumulated
depreciation, depletion, amortisation and valuation provisions.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Australia US$M |
|
|
United States US$M |
|
|
Other(1) US$M |
|
Total US$M |
|
Capitalised cost |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unproved properties |
|
|
|
|
|
|
754 |
|
|
580 |
|
|
1,334 |
|
|
|
|
|
|
Proved properties |
|
|
17,882 |
|
|
|
13,210 |
|
|
1,972 |
|
|
33,064 |
|
|
|
|
|
|
Total costs |
|
|
17,882 |
|
|
|
13,964 |
|
|
2,552 |
|
|
34,398 |
|
|
|
|
|
|
Less: Accumulated depreciation, depletion, amortisation and valuation provisions |
|
|
(12,720) |
|
|
|
(8,329) |
|
|
(1,483) |
|
|
(22,532) |
|
|
|
|
|
|
Net capitalised costs |
|
|
5,162 |
|
|
|
5,635 |
|
|
1,069 |
|
|
11,866 |
|
|
|
|
|
|
2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unproved properties |
|
|
10 |
|
|
|
808 |
|
|
576 |
|
|
1,394 |
|
|
|
|
|
|
Proved properties |
|
|
17,079 |
|
|
|
12,538 |
|
|
1,743 |
|
|
31,360 |
|
|
|
|
|
|
Total costs |
|
|
17,089 |
|
|
|
13,346 |
|
|
2,319 |
|
|
32,754 |
|
|
|
|
|
|
Less: Accumulated depreciation, depletion, amortisation and valuation provisions |
|
|
(11,423) |
|
|
|
(8,726) |
|
|
(1,370) |
|
|
(21,519) |
|
|
|
|
|
|
Net capitalised costs |
|
|
5,666 |
|
|
|
4,620 |
|
|
949 |
|
|
11,235 |
|
|
|
|
|
|
2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unproved properties |
|
|
10 |
|
|
|
875 |
|
|
458 |
|
|
1,343 |
|
|
|
|
|
|
Proved properties |
|
|
16,514 |
|
|
|
11,751 |
|
|
1,625 |
|
|
29,890 |
|
|
|
|
|
|
Total costs |
|
|
16,524 |
|
|
|
12,626 |
|
|
2,083 |
|
|
31,233 |
|
|
|
|
|
|
Less: Accumulated depreciation, depletion, amortisation and valuation provisions |
|
|
(10,867) |
|
|
|
(8,339) |
|
|
(1,302) |
|
|
(20,508) |
|
|
|
|
|
|
Net capitalised costs |
|
|
5,657 |
|
|
|
4,287 |
|
|
781 |
|
|
10,725 |
|
(1) |
Other is primarily comprised of Algeria, Mexico, and Trinidad and Tobago. |
63
Costs incurred relating to oil and gas property acquisition, exploration and
development activities
The following table shows costs incurred relating to oil and gas property acquisition, exploration and development
activities (whether charged to expense or capitalised). Amounts shown include interest capitalised.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Australia
US$M |
|
|
United
States(3) US$M |
|
|
Other(4)
US$M |
|
|
Total
US$M |
|
2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisitions of proved property |
|
|
|
|
|
|
642 |
|
|
|
|
|
|
|
642 |
|
|
|
|
|
|
Acquisitions of unproved property |
|
|
|
|
|
|
19 |
|
|
|
|
|
|
|
19 |
|
|
|
|
|
|
Exploration(1) |
|
|
23 |
|
|
|
166 |
|
|
|
310 |
|
|
|
499 |
|
|
|
|
|
|
Development |
|
|
201 |
|
|
|
749 |
|
|
|
184 |
|
|
|
1,134 |
|
|
|
|
|
|
Total costs(2) |
|
|
224 |
|
|
|
1,576 |
|
|
|
494 |
|
|
|
2,294 |
|
|
|
|
|
|
2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisitions of proved property |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisitions of unproved property |
|
|
|
|
|
|
38 |
|
|
|
6 |
|
|
|
44 |
|
|
|
|
|
|
Exploration(1) |
|
|
38 |
|
|
|
278 |
|
|
|
370 |
|
|
|
686 |
|
|
|
|
|
|
Development |
|
|
232 |
|
|
|
676 |
|
|
|
100 |
|
|
|
1,008 |
|
|
|
|
|
|
Total costs(2) |
|
|
270 |
|
|
|
992 |
|
|
|
476 |
|
|
|
1,738 |
|
2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisitions of proved property |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisitions of unproved property |
|
|
|
|
|
|
5 |
|
|
|
|
|
|
|
5 |
|
|
|
|
|
|
Exploration(1) |
|
|
44 |
|
|
|
190 |
|
|
|
492 |
|
|
|
726 |
|
|
|
|
|
|
Development |
|
|
132 |
|
|
|
792 |
|
|
|
54 |
|
|
|
978 |
|
|
|
|
|
|
Total costs(2) |
|
|
176 |
|
|
|
987 |
|
|
|
546 |
|
|
|
1,709 |
|
(1) |
Represents gross exploration expenditure, including capitalised exploration expenditure, geological and geophysical
expenditure and development evaluation costs charged to income as incurred. |
(2) |
Total costs include US$1,160 million (2020: US$1,178 million; 2019: US$1,275 million) capitalised during the
year. |
(3) |
Total costs include Onshore US assets of US$ nil (2020: US$ nil; 2019: US$331 million). |
(4) |
Other is primarily comprised of Algeria, Canada, Mexico and Trinidad and Tobago. |
Results of operations from oil and gas producing activities
Amounts shown in the following table exclude financial income, financial expenses, and general corporate overheads. Further, the amounts shown below
include Onshore US.
Income taxes were determined by applying the applicable statutory rates to pre-tax
income with adjustments for permanent differences and tax credits.
64
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Australia
US$M |
|
|
United
States(7) US$M |
|
|
Other(8)
US$M |
|
|
Total
US$M |
|
2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oil and gas revenue(1) |
|
|
2,272 |
|
|
|
1,244 |
|
|
|
368 |
|
|
|
3,884 |
|
|
|
|
|
|
Production costs |
|
|
(487) |
|
|
|
(267) |
|
|
|
(80) |
|
|
|
(834) |
|
|
|
|
|
|
Exploration expenses |
|
|
(23) |
|
|
|
(164) |
|
|
|
(305) |
|
|
|
(492) |
|
|
|
|
|
|
Depreciation, depletion, amortisation and valuation provision(2) |
|
|
(1,210) |
|
|
|
(489) |
|
|
|
(113) |
|
|
|
(1,812) |
|
|
|
|
|
|
Production taxes(3) |
|
|
(125) |
|
|
|
|
|
|
|
(12) |
|
|
|
(137) |
|
|
|
|
427 |
|
|
|
324 |
|
|
|
(142) |
|
|
|
609 |
|
Accretion expense(4) |
|
|
(89) |
|
|
|
(22) |
|
|
|
(3) |
|
|
|
(114) |
|
|
|
|
|
|
Income taxes |
|
|
(46) |
|
|
|
(78) |
|
|
|
(105) |
|
|
|
(229) |
|
|
|
|
|
|
Royalty-related taxes(5) |
|
|
11 |
|
|
|
|
|
|
|
|
|
|
|
11 |
|
|
|
|
|
|
Results of oil and gas producing
activities(6) |
|
|
303 |
|
|
|
224 |
|
|
|
(250) |
|
|
|
277 |
|
|
|
|
|
|
2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oil and gas revenue(1) |
|
|
2,535 |
|
|
|
1,101 |
|
|
|
350 |
|
|
|
3,986 |
|
|
|
|
|
|
Production costs |
|
|
(575) |
|
|
|
(161) |
|
|
|
(76) |
|
|
|
(812) |
|
|
|
|
|
|
Exploration expenses |
|
|
(37) |
|
|
|
(271) |
|
|
|
(252) |
|
|
|
(560) |
|
|
|
|
|
|
Depreciation, depletion, amortisation and valuation provision(2) |
|
|
(906) |
|
|
|
(476) |
|
|
|
(75) |
|
|
|
(1,457) |
|
|
|
|
|
|
Production taxes(3) |
|
|
(177) |
|
|
|
(1) |
|
|
|
(13) |
|
|
|
(191) |
|
|
|
|
840 |
|
|
|
192 |
|
|
|
(66) |
|
|
|
966 |
|
Accretion expense(4) |
|
|
(78) |
|
|
|
(24) |
|
|
|
(5) |
|
|
|
(107) |
|
|
|
|
|
|
Income taxes |
|
|
(275) |
|
|
|
(35) |
|
|
|
(134) |
|
|
|
(444) |
|
|
|
|
|
|
Royalty-related taxes(5) |
|
|
(85) |
|
|
|
|
|
|
|
|
|
|
|
(85) |
|
|
|
|
|
|
Results of oil and gas producing activities(6) |
|
|
402 |
|
|
|
133 |
|
|
|
(205) |
|
|
|
330 |
|
|
|
|
|
|
2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oil and gas revenue(1) |
|
|
3,404 |
|
|
|
2,675 |
|
|
|
598 |
|
|
|
6,677 |
|
|
|
|
|
|
Production costs |
|
|
(752) |
|
|
|
(568) |
|
|
|
(110) |
|
|
|
(1,430) |
|
|
|
|
|
|
Exploration expenses |
|
|
(44) |
|
|
|
(162) |
|
|
|
(229) |
|
|
|
(435) |
|
|
|
|
|
|
Depreciation, depletion, amortisation and valuation provision(2) |
|
|
(917) |
|
|
|
(621) |
|
|
|
(103) |
|
|
|
(1,641) |
|
|
|
|
|
|
Production taxes(3) |
|
|
(198) |
|
|
|
|
|
|
|
(25) |
|
|
|
(223) |
|
|
|
|
1,493 |
|
|
|
1,324 |
|
|
|
131 |
|
|
|
2,948 |
|
Accretion expense(4) |
|
|
(80) |
|
|
|
(34) |
|
|
|
(8) |
|
|
|
(122) |
|
|
|
|
|
|
Income taxes |
|
|
(530) |
|
|
|
(193) |
|
|
|
(236) |
|
|
|
(959) |
|
|
|
|
|
|
Royalty-related taxes(5) |
|
|
(164) |
|
|
|
|
|
|
|
|
|
|
|
(164) |
|
|
|
|
|
|
Results of oil and gas producing activities(6) |
|
|
719 |
|
|
|
1,097 |
|
|
|
(113) |
|
|
|
1,703 |
|
(1) |
Includes sales to affiliated companies of US$51 million (2020: US$62 million; 2019: US$75 million).
|
(2) |
Includes valuation provision of US$101 million (2020: US$12 million; 2019: US$21 million).
|
(3) |
Includes royalties and excise duty. |
(4) |
Represents the unwinding of the discount on the closure and rehabilitation provision. |
(5) |
Includes petroleum resource rent tax and petroleum revenue tax where applicable. |
(6) |
Amounts shown exclude financial income, financial expenses and general corporate overheads and, accordingly, do not
represent all of the operations attributable to the Petroleum segment presented in note 1 Segment reporting in section 3.1. |
(7) |
Results of oil and gas producing activities includes Onshore US assets of US$ nil (2020: US$ nil; 2019: US$431
million). |
(8) |
Other is primarily comprised of Algeria, Canada, Mexico, and Trinidad and Tobago. |
Standardised measure of discounted future net cash flows relating to proved oil and gas reserves (Standardised measure)
The following tables set out the standardised measure of discounted future net cash flows, and changes therein, related to BHP Petroleums estimated proved reserves
and should be read in conjunction with that related disclosure.
The analysis is prepared in compliance with FASB Oil and Gas Disclosure requirements, applying
certain prescribed assumptions under Topic 932 including the use of unweighted average
first-day-of-the-month market prices for the previous
12-months, year-end cost factors, currently enacted tax rates and an annual discount factor of 10 per cent to year-end
quantities of net proved reserves.
65
Certain key assumptions prescribed under Topic 932 are arbitrary in nature and may not prove to be accurate. The
reserve estimates on which the Standard measure is based are subject to revision as further technical information becomes available or economic conditions change. Discounted future net cash flows like those shown below are not intended to represent
estimates of fair value. An estimate of fair value would also take into account, among other things, the expected recovery of reserves in excess of proved reserves, anticipated future changes in commodity prices, exchange rates, development and
production costs as well as alternative discount factors representing the time value of money and adjustments for risk inherent in producing oil and gas.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Australia |
|
|
United States |
|
|
Other(1) |
|
|
Total |
|
|
|
US$M |
|
|
US$M |
|
|
US$M |
|
|
US$M |
|
|
|
|
|
|
Standardised measure
2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Future cash inflows |
|
|
8,948 |
|
|
|
13,437 |
|
|
|
1,561 |
|
|
|
23,946 |
|
|
|
|
|
|
Future production costs |
|
|
(3,783) |
|
|
|
(5,122) |
|
|
|
(418) |
|
|
|
(9,323) |
|
|
|
|
|
|
Future development costs |
|
|
(4,118) |
|
|
|
(2,996) |
|
|
|
(261) |
|
|
|
(7,375) |
|
|
|
|
|
|
Future income taxes(2) |
|
|
706 |
|
|
|
(944) |
|
|
|
(438) |
|
|
|
(676) |
|
|
|
|
|
|
Future net cash flows |
|
|
1,753 |
|
|
|
4,375 |
|
|
|
444 |
|
|
|
6,572 |
|
|
|
|
|
|
Discount at 10 per cent per annum |
|
|
(160) |
|
|
|
(1,468) |
|
|
|
(93) |
|
|
|
(1,721) |
|
|
|
|
|
|
Standardised measure |
|
|
1,593 |
|
|
|
2,907 |
|
|
|
351 |
|
|
|
4,851 |
|
|
|
|
|
|
2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Future cash inflows |
|
|
11,526 |
|
|
|
12,997 |
|
|
|
1,660 |
|
|
|
26,183 |
|
|
|
|
|
|
Future production costs |
|
|
(4,027) |
|
|
|
(4,943) |
|
|
|
(494) |
|
|
|
(9,464) |
|
|
|
|
|
|
Future development costs |
|
|
(4,124) |
|
|
|
(3,242) |
|
|
|
(433) |
|
|
|
(7,799) |
|
|
|
|
|
|
Future income taxes(2) |
|
|
(187) |
|
|
|
(880) |
|
|
|
(473) |
|
|
|
(1,540) |
|
|
|
|
|
|
Future net cash flows |
|
|
3,188 |
|
|
|
3,932 |
|
|
|
260 |
|
|
|
7,380 |
|
|
|
|
|
|
Discount at 10 per cent per annum |
|
|
(642) |
|
|
|
(1,586) |
|
|
|
(94) |
|
|
|
(2,322) |
|
|
|
|
|
|
Standardised measure |
|
|
2,546 |
|
|
|
2,346 |
|
|
|
166 |
|
|
|
5,058 |
|
|
|
|
|
|
2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Future cash inflows |
|
|
18,292 |
|
|
|
18,076 |
|
|
|
1,807 |
|
|
|
38,175 |
|
|
|
|
|
|
Future production costs |
|
|
(4,710) |
|
|
|
(4,917) |
|
|
|
(459) |
|
|
|
(10,086) |
|
|
|
|
|
|
Future development costs |
|
|
(3,860) |
|
|
|
(4,516) |
|
|
|
(226) |
|
|
|
(8,602) |
|
|
|
|
|
|
Future income taxes(2) |
|
|
(2,551) |
|
|
|
(1,657) |
|
|
|
(711) |
|
|
|
(4,919) |
|
|
|
|
|
|
Future net cash flows |
|
|
7,171 |
|
|
|
6,986 |
|
|
|
411 |
|
|
|
14,568 |
|
|
|
|
|
|
Discount at 10 per cent per annum |
|
|
(1,926) |
|
|
|
(3,396) |
|
|
|
(94) |
|
|
|
(5,416) |
|
|
|
|
|
|
Standardised measure |
|
|
5,245 |
|
|
|
3,590 |
|
|
|
317 |
|
|
|
9,152 |
|
(1) |
Other is primarily comprised of Algeria and Trinidad and Tobago. |
(2) |
Future income taxes include credits to be received as a result of oil and gas operations and the utilisation of future
tax losses by BHP Petroleum. |
66
Changes in the Standardised measure are presented in the following table.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2021 |
|
|
2020 |
|
|
2019 |
|
|
|
US$M |
|
|
US$M |
|
|
US$M |
|
Changes in the Standardised measure |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Standardised measure at the beginning of the year |
|
|
5,058 |
|
|
|
9,152 |
|
|
|
10,240 |
|
|
|
|
|
Revisions: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Prices, net of production costs |
|
|
(175) |
|
|
|
(5,633) |
|
|
|
3,821 |
|
|
|
|
|
Changes in future development costs |
|
|
(238) |
|
|
|
330 |
|
|
|
(228) |
|
|
|
|
|
Revisions of reserves quantity estimates(1) |
|
|
(107) |
|
|
|
(229) |
|
|
|
1,268 |
|
|
|
|
|
Accretion of discount |
|
|
678 |
|
|
|
1,313 |
|
|
|
1,178 |
|
|
|
|
|
Changes in production timing and other |
|
|
360 |
|
|
|
(310) |
|
|
|
(618) |
|
|
|
|
5,576 |
|
|
|
4,623 |
|
|
|
15,661 |
|
|
|
|
|
Sales of oil and gas, net of production costs |
|
|
(2,901) |
|
|
|
(2,980) |
|
|
|
(5,029) |
|
|
|
|
|
Acquisitions of
reserves-in-place |
|
|
462 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales of
reserves-in-place(2) |
|
|
44 |
|
|
|
|
|
|
|
(1,489) |
|
|
|
|
|
Previously estimated development costs incurred |
|
|
1,075 |
|
|
|
1,005 |
|
|
|
545 |
|
|
|
|
|
Extensions, discoveries, and improved recoveries, net of future costs |
|
|
17 |
|
|
|
145 |
|
|
|
(33) |
|
|
|
|
|
Changes in future income taxes |
|
|
578 |
|
|
|
2,265 |
|
|
|
(503) |
|
|
|
|
|
Standardised measure at the end of the year |
|
|
4,851 |
|
|
|
5,058 |
|
|
|
9,152 |
|
(1) |
Changes in reserves quantities are shown in the Petroleum reserves tables in section 4.6.1. |
(2) |
Onshore US assets disposal in 2019. |
Accounting for suspended exploratory well costs
Refer to note 8 Property, plant and equipment in the financial statements for BHP Petroleum for a discussion of the accounting policy
applied to the cost of exploratory wells. Suspended wells are also reviewed in this context.
The following table provides the changes to
capitalised exploratory well costs that were pending the determination of proved reserves for the three years ended 30 June 2021, 30 June 2020 and 30 June 2019.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2021 |
|
|
2020 |
|
|
2019 |
|
|
|
US$M |
|
|
US$M |
|
|
US$M |
|
Movement in capitalised exploratory well costs |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At the beginning of the year |
|
|
1,089 |
|
|
|
1,040 |
|
|
|
794 |
|
|
|
|
|
Additions to capitalised exploratory well costs pending the determination of proved reserves |
|
|
7 |
|
|
|
120 |
|
|
|
297 |
|
|
|
|
|
Capitalised exploratory well costs charged to expense |
|
|
(66) |
|
|
|
|
|
|
|
(9) |
|
|
|
|
|
Capitalised exploratory well costs reclassified to wells, equipment, and facilities based on the determination of proved reserves |
|
|
|
|
|
|
(6) |
|
|
|
(42) |
|
|
|
|
|
Sale of suspended wells |
|
|
|
|
|
|
(65) |
|
|
|
|
|
|
|
|
|
At the end of the year |
|
|
1,030 |
|
|
|
1,089 |
|
|
|
1,040 |
|
The following
table provides an ageing of capitalised exploratory well costs, based on the date the drilling was completed, and the number of projects for which exploratory well costs has been capitalised for a period greater than one year since the completion of
drilling.
Exploration activity typically involves drilling multiple wells, over a number of years, to fully evaluate and appraise a project. The
term project as used in this disclosure refers primarily to individual wells and associated exploratory activities.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2021 |
|
|
2020 |
|
|
2019 |
|
|
|
US$M |
|
|
US$M |
|
|
US$M |
|
Ageing of capitalised exploratory well costs |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exploratory well costs capitalised for a period of one year or less |
|
|
7 |
|
|
|
120 |
|
|
|
210 |
|
|
|
|
|
Exploratory well costs capitalised for a period greater than one year |
|
|
1,023 |
|
|
|
969 |
|
|
|
830 |
|
|
|
|
|
At the end of the year |
|
|
1,030 |
|
|
|
1,089 |
|
|
|
1,040 |
|
67
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2021 |
|
|
2020 |
|
|
2019 |
|
Number of projects that have been capitalised for a
period greater than one year |
|
|
15 |
|
|
|
14 |
|
|
|
13 |
|
Drilling and other exploratory and development activities
The number of crude oil and natural gas wells drilled and completed for each of the last three years was as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net exploratory wells |
|
|
Net development wells |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Productive |
|
|
Dry |
|
|
Total |
|
|
Productive |
|
|
Dry |
|
|
Total |
|
|
Total |
|
Year ended 30 June 2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Australia |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 |
|
|
|
|
|
|
|
1 |
|
|
|
1 |
|
|
|
|
|
|
|
|
|
United States(1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 |
|
|
|
|
|
|
|
1 |
|
|
|
1 |
|
|
|
|
|
|
|
|
|
Other(2) |
|
|
|
|
|
|
1 |
|
|
|
1 |
|
|
|
1 |
|
|
|
|
|
|
|
1 |
|
|
|
2 |
|
|
|
|
|
|
|
|
|
Total |
|
|
|
|
|
|
1 |
|
|
|
1 |
|
|
|
3 |
|
|
|
|
|
|
|
3 |
|
|
|
4 |
|
|
|
|
|
|
|
|
|
Year ended 30 June 2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Australia |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
United States(1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 |
|
|
|
1 |
|
|
|
1 |
|
|
|
|
|
|
|
|
|
Other(2) |
|
|
1 |
|
|
|
1 |
|
|
|
2 |
|
|
|
1 |
|
|
|
|
|
|
|
1 |
|
|
|
3 |
|
|
|
|
|
|
|
|
|
Total |
|
|
1 |
|
|
|
1 |
|
|
|
2 |
|
|
|
1 |
|
|
|
1 |
|
|
|
2 |
|
|
|
4 |
|
|
|
|
|
|
|
|
|
Year ended 30 June 2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Australia |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 |
|
|
|
|
|
|
|
1 |
|
|
|
1 |
|
|
|
|
|
|
|
|
|
United States(1) |
|
|
1 |
|
|
|
|
|
|
|
1 |
|
|
|
33 |
|
|
|
|
|
|
|
33 |
|
|
|
34 |
|
|
|
|
|
|
|
|
|
Other(2) |
|
|
4 |
|
|
|
2 |
|
|
|
6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6 |
|
|
|
|
|
|
|
|
|
Total |
|
|
5 |
|
|
|
2 |
|
|
|
7 |
|
|
|
34 |
|
|
|
|
|
|
|
34 |
|
|
|
41 |
|
(1) |
Includes Onshore US assets net productive development wells of nil (2020: nil; 2019: 33). Includes Onshore US assets
net exploratory wells of nil for 2021, 2020 and 2019. |
(2) |
Other is primarily comprised of Algeria, Mexico and Trinidad and Tobago. |
The number of wells drilled refers to the number of wells completed at any time during the respective year, regardless of when drilling was initiated. Completion refers
to the installation of permanent equipment for production of oil or gas, or, in the case of a dry well, to reporting to the appropriate authority that the well has been abandoned.
An exploratory well is a well drilled to find oil or gas in a new field or to find a new reservoir in a field previously found to be productive of oil
or gas in another reservoir. A development well is a well drilled within the limits of a known oil or gas reservoir to the depth of a stratigraphic horizon known to be productive.
A productive well is an exploratory, development or extension well that is not a dry well. Productive wells include wells in which hydrocarbons were
encountered and the drilling or completion of which, in the case of exploratory wells, has been suspended pending further drilling or evaluation. A dry well (hole) is an exploratory, development, or extension well that proves to be incapable of
producing either oil or gas in sufficient quantities to justify completion as an oil or gas well.
Oil and gas properties, wells, operations, and
acreage
The following tables show the number of gross and net productive crude oil and natural gas wells and total gross and net developed and
undeveloped oil and natural gas acreage as at 30 June 2021, 2020 and 2019. A gross well or acre is one in which a working interest is owned, while a net well or acre exists when the sum of fractional working interests owned in gross wells or
acres equals one. Productive wells are producing wells and wells mechanically capable of production. Developed acreage is comprised of leased acres that are within an area by or assignable to a productive well. Undeveloped acreage is comprised of
leased acres on which wells have not been drilled or completed to a point that would permit the production of economic quantities of oil and gas, regardless of whether such acres contain proved reserves.
68
The number of productive crude oil and natural gas wells in which BHP Petroleum held an interest at
30 June 2021 was as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Crude oil wells
|
|
|
Natural gas wells |
|
|
Total |
|
|
|
|
|
|
|
|
|
|
Gross |
|
|
Net |
|
|
Gross |
|
|
Net |
|
|
Gross |
|
|
Net |
|
Australia |
|
|
334 |
|
|
|
166 |
|
|
|
176 |
|
|
|
66 |
|
|
|
510 |
|
|
|
232 |
|
|
|
|
|
|
|
|
United States |
|
|
55 |
|
|
|
27 |
|
|
|
|
|
|
|
|
|
|
|
55 |
|
|
|
27 |
|
|
|
|
|
|
|
|
Other(1) |
|
|
61 |
|
|
|
23 |
|
|
|
8 |
|
|
|
4 |
|
|
|
69 |
|
|
|
27 |
|
|
|
|
|
|
|
|
Total |
|
|
450 |
|
|
|
216 |
|
|
|
184 |
|
|
|
70 |
|
|
|
634 |
|
|
|
286 |
|
(1) |
Other is primarily comprised of Algeria and Trinidad and Tobago. |
Of the productive crude oil and natural gas wells, 131 (net: 60) operated wells had multiple completions.
Developed and undeveloped acreage (including both leases and concessions) held at 30 June 2021 was as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Developed acreage |
|
|
Undeveloped acreage |
|
Thousands of acres |
|
Gross |
|
|
Net |
|
|
Gross |
|
|
Net |
|
Australia |
|
|
2,423 |
|
|
|
897 |
|
|
|
391 |
|
|
|
148 |
|
|
|
|
|
|
United States |
|
|
92 |
|
|
|
41 |
|
|
|
403 |
|
|
|
339 |
|
|
|
|
|
|
Other(1)(2) |
|
|
160 |
|
|
|
67 |
|
|
|
3,394 |
|
|
|
3,104 |
|
|
|
|
|
|
Total |
|
|
2,675 |
|
|
|
1,005 |
|
|
|
4,188 |
|
|
|
3,591 |
|
(1) |
Developed acreage in Other primarily consists of Algeria and Trinidad and Tobago. |
(2) |
Undeveloped acreage in Other primarily consists of Barbados, Canada, Mexico and Trinidad and Tobago.
|
Approximately 139 thousand gross acres (22 thousand net acres), 386 thousand gross acres (241 thousand net
acres) and 121 thousand gross acres (103 thousand net acres) of undeveloped acreage will expire in the years ending 30 June 2022, 2023 and 2024 respectively, if BHP Petroleum does not establish production or take any other action to
extend the terms of the licences and concessions.
The number of productive crude oil and natural gas wells in which BHP Petroleum held an interest
at 30 June 2020 was as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Crude oil wells
|
|
|
Natural gas wells |
|
|
Total |
|
|
|
Gross |
|
|
Net |
|
|
Gross |
|
|
Net |
|
|
Gross |
|
|
Net |
|
Australia |
|
|
353 |
|
|
|
176 |
|
|
|
162 |
|
|
|
54 |
|
|
|
515 |
|
|
|
230 |
|
|
|
|
|
|
|
|
United States |
|
|
61 |
|
|
|
24 |
|
|
|
|
|
|
|
|
|
|
|
61 |
|
|
|
24 |
|
|
|
|
|
|
|
|
Other(1) |
|
|
59 |
|
|
|
22 |
|
|
|
8 |
|
|
|
4 |
|
|
|
67 |
|
|
|
26 |
|
|
|
|
|
|
|
|
Total |
|
|
473 |
|
|
|
222 |
|
|
|
170 |
|
|
|
58 |
|
|
|
643 |
|
|
|
280 |
|
(2) |
Other is primarily comprised of Algeria and Trinidad and Tobago. |
Of the productive crude oil and natural gas wells, 133 (net: 62) operated wells had multiple completions.
69
Developed and undeveloped acreage (including both leases and concessions) held at 30 June 2020
was as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Developed acreage |
|
|
Undeveloped acreage |
|
|
|
|
|
|
Thousands of acres |
|
Gross |
|
|
Net |
|
|
Gross |
|
|
Net |
|
Australia |
|
|
2,152 |
|
|
|
823 |
|
|
|
766 |
|
|
|
279 |
|
|
|
|
|
|
United States |
|
|
98 |
|
|
|
36 |
|
|
|
844 |
|
|
|
800 |
|
|
|
|
|
|
Other(1)(2) |
|
|
146 |
|
|
|
57 |
|
|
|
3,926 |
|
|
|
3,445 |
|
|
|
|
|
|
Total |
|
|
2,396 |
|
|
|
916 |
|
|
|
5,536 |
|
|
|
4,524 |
|
(3) |
Developed acreage in Other primarily consists of Algeria and Trinidad and Tobago. |
(4) |
Undeveloped acreage in Other primarily consists of Barbados, Canada, Mexico and Trinidad and Tobago.
|
Approximately 833 thousand gross acres (411 thousand net acres), 1,089 thousand gross acres (655 thousand net
acres) and 264 thousand gross acres (256 thousand net acres) of undeveloped acreage will expire in the years ending 30 June 2021, 2022 and 2023 respectively, if BHP Petroleum does not establish production or take any other action to
extend the terms of the licences and concessions.
The number of productive crude oil and natural gas wells in which BHP Petroleum held an interest
at 30 June 2019 was as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Crude oil wells |
|
|
Natural gas wells |
|
|
Total |
|
|
|
|
|
|
|
|
|
|
Gross |
|
|
Net |
|
|
Gross |
|
|
Net |
|
|
Gross |
|
|
Net |
|
Australia |
|
|
352 |
|
|
|
176 |
|
|
|
153 |
|
|
|
53 |
|
|
|
505 |
|
|
|
229 |
|
|
|
|
|
|
|
|
United States |
|
|
60 |
|
|
|
25 |
|
|
|
|
|
|
|
|
|
|
|
60 |
|
|
|
25 |
|
|
|
|
|
|
|
|
Other(1) |
|
|
57 |
|
|
|
21 |
|
|
|
8 |
|
|
|
4 |
|
|
|
65 |
|
|
|
25 |
|
|
|
|
|
|
|
|
Total |
|
|
469 |
|
|
|
222 |
|
|
|
161 |
|
|
|
57 |
|
|
|
630 |
|
|
|
279 |
|
(3) |
Other is primarily comprised of Algeria, Mexico and Trinidad and Tobago. |
Of the productive crude oil and natural gas wells, 43 (net: 18) operated wells had multiple completions.
Developed and undeveloped acreage (including both leases and concessions) held at 30 June 2019 was as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Developed acreage |
|
|
Undeveloped acreage |
|
|
|
|
|
|
Thousands of acres |
|
Gross |
|
|
Net |
|
|
Gross |
|
|
Net |
|
Australia |
|
|
2,152 |
|
|
|
823 |
|
|
|
963 |
|
|
|
393 |
|
|
|
|
|
|
United States |
|
|
105 |
|
|
|
39 |
|
|
|
828 |
|
|
|
776 |
|
|
|
|
|
|
Other(1)(2) |
|
|
146 |
|
|
|
57 |
|
|
|
3,526 |
|
|
|
2,869 |
|
|
|
|
|
|
Total |
|
|
2,403 |
|
|
|
919 |
|
|
|
5,317 |
|
|
|
4,038 |
|
(5) |
Developed acreage in Other primarily consists of Algeria and Trinidad and Tobago. |
(6) |
Undeveloped acreage in Other primarily consists of Canada, Mexico and Trinidad and Tobago. |
Approximately 126 thousand gross acres (59 thousand net acres), 1,612 thousand gross acres (932 thousand net acres) and
1,257 thousand gross acres (889 thousand net acres) of undeveloped acreage will expire in the years ending 30 June 2020, 2021 and 2022 respectively, if BHP Petroleum does not establish production or take any other action to extend the
terms of the licences and concessions.
70
Annexure 3: Independent Expert Report
Refer to Independent Expert Report separately annexed to this Merger Explanatory Memorandum
P a g e 179 |
180
Woodside Petroleum Ltd
ABN 55 004 898 962
Registered Office
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Woodside Shares are quoted by the
Australian Securities Exchange (ASX: WPL).
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Forward-looking statements
This announcement contains forward-looking statements. The words anticipate, believe, aim, estimate,
expect, intend, may, target, plan, forecast, project, schedule, will, should, seek and other similar words or
expressions are intended to identify forward-looking statements. These forward-looking statements are based on assumptions and contingencies that are subject to change without notice and involve known and unknown risks, uncertainties and other
factors, many of which are beyond the control of Woodside, BHP and their respective related bodies corporate and affiliates (and each of their respective directors, officers, employees, partners, consultants, contractors, agents, advisers and
representatives), and could cause results, performance or achievements to be materially different from the results, performance or achievements that are or may be expressed or implied by those forward-looking statements or any projections or
assumptions on which those statements are based.
The forward-looking statements are subject to risk factors, including those associated with the oil and
gas industry as well as those in connection with the Transaction. It is believed that the expectations reflected in these statements are reasonable, but they may be affected by a range of variables which could cause actual results or trends to
differ materially, including but not limited to: price fluctuations, actual demand, currency fluctuations, geotechnical factors, drilling and production results, gas commercialisation, development progress, operating results, engineering estimates,
reserve estimates, loss of market, industry competition, environmental risks, physical risks, legislative, fiscal and regulatory developments, economic and financial markets, conditions in various countries, approvals and cost estimates.
Investors are strongly cautioned not to place undue reliance on forward-looking statements, particularly in light of the current economic climate and the
significant uncertainty and disruption caused by the COVID-19 pandemic. Forward-looking statements are provided as a general guide only and should not be relied on as an indication or guarantee of future
performance. These statements may assume the success of the Transaction, BHPs oil and gas portfolio or Woodsides business strategies, the success of which may not be realised within the period for which the forward-looking statements may
have been prepared, or at all. No guarantee, representation or warranty, express or implied, is made as to the accuracy, likelihood of achievement or reasonableness of any forecasts, prospects, returns, statements or tax treatment in relation to
future matters contained in this presentation.
Disclosure of reserve information and cautionary note to US investors
Unless expressly stated otherwise, all estimates of oil and gas reserves and contingent resources disclosed in this presentation have been prepared using
definitions and guidelines consistent with the 2018 Society of Petroleum Engineers (SPE)/World Petroleum Council (WPC)/American Association of Petroleum Geologists (AAPG)/Society of Petroleum Evaluation Engineers (SPEE) Petroleum Resources
Management System (PRMS). Estimates of reserves and contingent resource in this presentation will differ from corresponding estimates prepared in accordance with the rules of the US Securities and Exchange Commission (the SEC) and
disclosure requirements of the US Financial Accounting Standards Board (FASB), and those differences may be material. For additional information regarding the availability of Woodsides reserves disclosures in accordance with SEC
requirements, please see Woodsides investor presentation dated 17 August 2021 and released to the ASX. For additional information regarding BHPs reserves, please see BHPs annual report on Form 20-F filed with the SEC.
No offer or solicitation
This communication relates to
the proposed Transaction between Woodside and BHP. This communication is not intended to and does not constitute an offer to sell or the solicitation of an offer to subscribe for or buy any securities or a solicitation of any vote or approval with
respect to the Transaction or otherwise, nor shall there be any offer, solicitation or sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities
laws of any such jurisdiction. No offer of securities in the United States shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933.
Important additional information and where to find it
In
connection with the proposed Transaction, Woodside intends to file with the US Securities and Exchange Commission (the SEC) a registration statement on Form F-4 (the Registration
Statement) to register the Woodside securities to be issued in connection with the proposed Transaction (including a prospectus therefor). Woodside and BHP also plan to file other documents with the SEC regarding the proposed Transaction. This
communication is not a substitute for the Registration Statement or the prospectus or for any other document that Woodside or BHP may file with the SEC in connection with the Transaction. US INVESTORS AND US HOLDERS OF WOODSIDE AND BHP SECURITIES
ARE URGED TO READ THE REGISTRATION STATEMENT, PROSPECTUS AND OTHER DOCUMENTS RELATING TO THE PROPOSED TRANSACTION (INCLUDING ALL AMENDMENTS AND SUPPLEMENTS TO THOSE DOCUMENTS) THAT WILL BE FILED WITH THE SEC CAREFULLY AND IN THEIR ENTIRETY WHEN THEY
BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT WOODSIDE, BHP AND THE PROPOSED TRANSACTION. Shareholders will be able to obtain free copies of the Registration Statement, prospectus and other documents containing important
information about Woodside and BHP once such documents are filed with the SEC, through the website maintained by the SEC at http://www.sec.gov. Copies of such documents may also be obtained from Woodside and BHP without charge.
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