BHP says energy unit not for sale
BHP Billiton gave a briefing on its petroleum business yesterday in London
in an attempt to reiterate that its upstream business is not for sale and
has strong growth potential.
However, many of the post-briefing questions were about BHP's mining
business, and specifically about BHP Billiton's proposed takeover of miner
Rio Tinto. This underlined the perception that BHP's upstream business sits
oddly aside BHP's massive mining business.
The company's chief executive Marius Kloppers and Petroleum boss Michael
Yeager told the briefing that its oil and gas business had buoyant growth
prospects, and was a firmly entrenched part of the wider company.
"In fact," said Koppers, "in many respects, upstream petroleum is little
different to mining. We understand and nurture the differences."
Yeager then took the stage with the message that BHP Billiton Petroleum is
very optimistic about its prospects thanks to rising production and a
"rejuvenated" exploration strategy.
The petroleum division, which accounts for one fifth of total operating
profit, has a 76% earnings gross profit margin, the highest in the company.
Yeager said earnings in the division will be helped dramatically because
about 60% of its natural gas and liquefied natural gas contracts have
"repricing" elements that will kick in over the next few years.
The petroleum business contributed produced an average 378,000 barrels of
oil equivalent per day in April this year compared to 318,000 boe per day in
full-year 2006.
What is more, production is forecast to grow nearly 10% annually to 2011,
underpinned by new projects that are in the construction phase. Several
major LNG projects are in the project pipeline too.
BHP has proven reserves of 1.35 billion barrels of oil equivalent, and 2.24
billion barrels of probable reserves and contingent resources, Yeager added.
On the exploration front, the company plans a 75% increase in exploration
spending this year to $700 million from $395 million in last year.
Its exploration and production focus remains on Western Australia and the
Gulf of Mexico, but significant exploration work is planned in new venture
countries like Malaysia, Colombia and The Falklands.
08 May 2008 03:47 GMT
| last updated:
08 May 2008 06:04 GMT
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