BHP to ramp up onshore US shale rigs

SYDNEY: BHP said on Wednesday it would double the number of onshore US shale rigs, despite a major shareholder pushing for the commodities giant to divest its American oil and gas assets.

The Anglo-Australian firm said in an annual operational review ending on June 30 that it increased the rig count to five during the April-June quarter, with plans to boost that to 10 in the 2018 financial year. The ramp up came even as BHP said it would selloff non-core shale assets in Hawkville, Texas, in the September quarter.

New York-based Elliott Advisors, a significant shareholder in the company, is pushing for BHP to restructure the business, including spinning off its US oil and gas operations and dissolving its costly dual stock market listing.

The world’s biggest miner rejected Elliott’s proposal in April, while Canberra has warned that removing BHP from the Australian Stock Exchange was not in the national interest.

Apart from iron ore and energy coal, annual production for BHP’s other assets — petroleum, copper and metallurgical coal — all fell, pushing shares down 1.67 per cent to Aus$24.68 in Sydney on Wednesday.

Total iron ore production for the 2017 financial year rose four per cent to 231 million metric tons after record output from its Western Australia operations.

The lift also came during a period where prices for the metal surged following a slump from a supply glut and softening Chinese demand.

Copper output eased 16 per cent for the year to 1,326 kilo tonnes, hurt by a strike in Chile at the world’s largest copper mine Escondida, with the industrial action also costing BHP $546 million in costs. But copper production was “expected to rebound strongly in the 2018 financial year”, BHP Chief Executive Andrew Mackenzie said, on the back of a new water project and an extension programme at Escondida.