Miner puts big money into oil, gas
BHP BILLITON, the largest overseas investor in US shale, boosted spending on its onshore oil and gas division as rising prices lure drillers to add rigs and spur a deals spree.
The company boosted spending on the unit to $165 million (R2.21 billion) in the three months to December 31, from $108m the previous quarter, according to a BHP statement yesterday.
It also boosted overall planned petroleum exploration spending by 17 percent to $820m for fiscal 2017 after its successful bid for Mexico’s Trion field and positive drilling results in the Gulf of Mexico.
The oil industry is expected to raise spending for the first time in three years after slashing almost half-amillion jobs globally during the downturn, industry consultant Graves & Co said this month.
Projects in BHP’s petroleum division will account for about half of its capital expenditure over the next five years, according to Macquarie Group.
“We will accelerate our counter-cyclical oil exploration efforts this year,” BHP chief executive Andrew Mackenzie said. “After the first successful rig, our onshore US gas hedging programme will also be expanded to secure attractive returns.”
BHP, which last year booked write-downs of $7.2bn against the shale unit, lifted the number of operating rigs in its US onshore division to three from two at the end of September, following the successful execution of its hedging pilot, according to the statement.
BHP, which earns about 21 percent of revenue from its petroleum business, including offshore assets, sees oil and natural gas as better placed for price gains into next year than iron ore, its top earner.
Oil prices have risen since Opec reached a deal to curtail supply last year. The November 30 agreement has prompted a surge in activity in the US, which is not an Opec member.