9th Sep 2015 11:02
LONDON (Alliance News) - BHP Billiton PLC shares rose on Wednesday after it said it can "wait until the time is right" to invest in its oil operations and said it will tailor its investment in the sector to maximise value for its shareholders.
BHP shares were up 5.0% to 1,141.50 pence per share on Wednesday, the third best-performer in the FTSE 100.
The multi-commodity major has oil and gas operations spread across the globe, specifically in the Gulf of Mexico, the US, Australia, the UK, Trinidad and Tobago and Pakistan.
BHP Petroleum President Tim Cutt will be speaking at the Barclays CEO Energy-Power Conference in New York later Wednesday, and will outline the company's plans to achieve "operational excellence" to "underpin value and returns" from the company's petroleum business.
"The diversification of BHP Billiton's portfolio and the strength of our balance sheet allow us to focus on value over volume. We have responded decisively to the change in market conditions and retain significant flexibility across our petroleum development programs. We can wait until the time is right before investing," Cutt said in a statement prior to the conference.
"We remain focused on value and returns above all else. Our projects must compete with other opportunities within BHP Billiton's portfolio. We will keep our plans under review and tailor our investment program to market conditions to maximise value for shareholders," he added.
At the company's Black Hawk field in the US, part of the Eagle Ford shale play, BHP is generating a 35% return at current WTI prices, and said it has applied techniques used on the field to the Permian basin in Texas which will reduce development costs at the field.
WTI was trading at around USD49 per barrel on Wednesday.
BHP is expecting its operations on the Permian basin to produce "well over" 150,000 barrels of oil equivalent per day once it is up and running, and believes as the oil price increases over time and it lowers costs that its margin will substantially improve by the time the field is producing.
"Our portfolio includes several attractive growth options that will add significant value for our shareholders over the long-term. We expect natural field decline and demand growth will support higher oil and gas prices in the medium term but remain focused on improving the competitiveness of these developments in today's market conditions," said Cutt.
Alongside the growth the Permian basin offers, BHP also expects the Mad Dog II project in the Gulf of Mexico to provide a "significant medium term growth opportunity".
"We will invest in oil exploration through the cycle and expect to test three major opportunities in our core basins of Gulf of Mexico, Trinidad & Tobago and Western Australia over the next three years," said Cutt.
By Joshua Warner; [email protected]; @JoshAlliance
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