Operational Review Quarter Ended 30 September 2016

BHP BILLITON OPERATIONAL REVIEW

FOR THE QUARTER ENDED 30 SEPTEMBER 2016

· All production and unit cost guidance remains unchanged for the 2017 financial year, however guidance for Olympic Dam is under review following a state-wide power outage in South Australia.

· Good progress continues on the Group's capital-efficient latent capacity options with the ramp-up of the Spence Recovery Optimisation project and additional capacity at Jimblebar during the period, and first production from the Los Colorados Extension project anticipated late in the 2017 financial year.

· All four major projects under development are tracking to plan.

· In Petroleum, positive drilling results were reported following the discovery of oil in multiple horizons at the Caicos exploration well in the Gulf of Mexico.

· We continue to optimise our portfolio of high-quality assets with the announced sale of 50 per cent of our interest in the undeveloped Scarborough area gas fields and completion of the IndoMet Coal and Navajo Coal divestments. We also entered into an agreement with the New South Wales Government to cease progression of the Caroona Coal project.

BHP Billiton Chief Executive Officer, Andrew Mackenzie, said: "Full year production and unit cost guidance remains unchanged. Safety and productivity continue to improve with our new operating model helping us identify and replicate best practice more quickly.

"We have seen early signs of markets rebalancing. Fundamentals suggest both oil and gas markets will improve over the next 12 to 18 months. Iron ore and metallurgical coal prices have been stronger than expected, although we continue to expect supply to grow more quickly than demand in the near term. Together, the combination of steadier markets, continued capital discipline, improved productivity and increased volumes in copper, iron ore and metallurgical coal should further support strong free cash flow generation this financial year."

Summary

Operational performance

Production for the September 2016 quarter and 2017 financial year guidance are summarised in the table below. Production guidance for the 2017 financial year remains unchanged despite lower volumes across several commodities in the September 2016 quarter as anticipated, however guidance for Olympic Dam is under review following a state-wide power outage in South Australia.

(i) Other copper comprises Pampa Norte, Olympic Dam and Antamina.

(ii) Excludes production from Samarco, New Mexico assets and Haju (IndoMet Coal).

Major development projects

At the end of the September 2016 quarter, BHP Billiton had four major projects under development in Petroleum, Copper and Potash, with a combined budget of US$6.9 billion over the life of the projects. All projects remain on time and on budget.

Corporate update

On 29 August 2016, a panel of four geotechnical specialists (Panel) published its findings into the immediate causes of the failure of the Fundão tailings dam at the iron ore operations of Samarco Mineração S.A (Samarco) in Minas Gerais, Brazil, on 5 November 2015. Vale S.A. (Vale), BHP Billiton Brasil LTDA (BHP Billiton Brasil) and Samarco jointly commissioned Cleary Gottlieb Steen & Hamilton LLP (Cleary Gottlieb) to investigate the immediate cause of the failure. To assist with the investigation, Cleary Gottlieb retained the Panel to advise on the technical aspects of the failure and to conduct testing and analysis. A full overview of the Panel's findings, explanatory materials, detailed modeling, input data, a video and technical diagrams can be found at Fundaoinvestigation.com.

On 21 September 2016, BHP Billiton released its Economic contribution and payments to governments report which shows the Company's total economic contribution globally in the 2016 financial year was US$26.7 billion. This includes US$3.7 billion globally in taxes, royalties and other payments to governments. The Company's adjusted effective tax rate in the 2016 financial year was 35.8 per cent, demonstrating BHP Billiton pays its fair share of tax. When royalties are included, the rate is more than 58 per cent.

Petroleum

Production

Total petroleum production - Total petroleum production for the September 2016 quarter decreased by 15 per cent to 54.5 MMboe. Guidance for the 2017 financial year remains unchanged at between 200 and 210 MMboe, comprising Conventional volumes between 123 and 127 MMboe and Onshore US volumes between 77 and 83 MMboe.

Crude oil, condensate and natural gas liquids - Crude oil, condensate and natural gas liquids production for the September 2016 quarter declined by 21 per cent to 24.2 MMboe.

Onshore US liquids volumes decreased by 38 per cent to 8.3 MMboe as a result of the continued reduction in activity in the Black Hawk and natural field decline in the Hawkville, which more than offset increased liquids production from the Permian.

Conventional liquids volumes decreased by eight per cent to 16.0 MMboe as an additional infill well at Mad Dog and higher production at North West Shelf partially offset natural field decline across the portfolio and planned maintenance at Atlantis.

Natural gas - Natural gas production for the September 2016 quarter declined by 10 per cent to 182 bcf.

The decline primarily reflects lower Onshore US gas volumes as a result of the decision to defer development activity for longer-term value and the successful divestment of our gas business in Pakistan on 31 December 2015. This was partially offset by increased LNG volumes at North West Shelf and higher demand at Bass Strait.

On 5 September 2016, BHP Billiton announced the sale of 50 per cent of its interest in the undeveloped Scarborough area gas fields. Under the proposed transaction, ExxonMobil will remain operator of Scarborough and operatorship of North Scarborough will transfer from BHP Billiton to Woodside. Completion of the sale is expected by the end of the 2016 calendar year.

Projects

Petroleum capital expenditure of approximately US$1.4 billion is planned in the 2017 financial year. This includes Conventional capital expenditure of US$0.8 billion which is focused on life extension projects at Bass Strait and North West Shelf. Onshore US capital expenditure is expected to be approximately US$0.6 billion with development activity tailored to market conditions.

Onshore US development activity

Onshore US drilling and development expenditure for the September 2016 quarter was US$108 million. Our operated rig count declined from four to two during the September 2016 quarter as we continued to improve drilling efficiency and defer development activity to maximise value. As a result of the successful execution of our hedging pilot in June 2016, we elected to move forward the development of our Haynesville gas assets and mobilised one rig in October 2016.

(i) Includes land acquisition, site preparation, drilling, completions, well site facilities, mid-stream infrastructure and pipelines.

(ii) Can vary between periods based on changes in rig activity and the inventory of wells drilled but not yet completed at period end.

Exploration and appraisal wells drilled during the September 2016 quarter are summarised below.

(i) Well depth as at 30 September 2016; drilling still in progress.

During the September 2016 quarter, BHP Billiton was the apparent high bidder on 12 blocks in the Gulf of Mexico Lease Sale 248 and also signed an agreement with Statoil to acquire an interest in two blocks (GC 436 and GC 480) in the Gulf of Mexico. Regulatory approval was granted during the September 2016 quarter for the Lease Exchange Agreement with Chevron for 61 blocks and the Sale and Purchase Agreement with ConocoPhillips for 26 blocks executed during the June 2016 quarter. In Australia, the WA 475-P permit was cancelled per the Offshore Petroleum and Greenhouse Gas Storage Act 2006 and BHP Billiton entered into a Good Standing Agreement with the Joint Authority(2). In South Africa, blocks 3B/4B expired.

The Group announced positive drilling results at the Caicos exploration well in the Gulf of Mexico, with oil encountered in multiple horizons. The next step will be drilling the Wildling well in November 2016 to further appraise the area.

Petroleum exploration expenditure for the September 2016 quarter was US$231 million, of which US$55 million was expensed. A US$700 million exploration program is planned for the 2017 financial year, largely focused on drilling activities in the Gulf of Mexico and Trinidad and Tobago.

Copper

Production

Copper - Total copper production for the September 2016 quarter decreased by six per cent to 355 kt. Guidance for the 2017 financial year remains unchanged at 1.66 Mt, subject to the review of Olympic Dam copper production guidance noted below.

Escondida copper production for the September 2016 quarter decreased by six per cent to 218 kt reflecting lower grade, as expected. Copper production decreased by 19 per cent from the June 2016 quarter and reflected lower grade, water availability and planned maintenance during the period. Production guidance for Escondida remains unchanged at approximately 1,070 kt, with volumes weighted to the second half of the 2017 financial year. The commissioning of the Escondida Water Supply project and the ramp-up of the Los Colorados Extension project late in the 2017 financial year, will enable full utilisation of three concentrators during the 2018 financial year.

Pampa Norte copper production for the September 2016 quarter increased by nine per cent to 62 kt supported by improved recoveries at Cerro Colorado. The ramp-up of the Spence Recovery Optimisation (SRO) project is progressing to plan and is expected to support an annualised production run rate of 200 ktpa late in the December 2016 quarter following planned maintenance being brought forward from February 2017. On 27 August 2016, processing at the Cerro Colorado Ore Handling Plant 2 was suspended following the failure of a transfer chute which is expected to take approximately two months to repair, further reducing production in the December 2016 quarter. Despite this, Pampa Norte copper production guidance for the 2017 financial year remains unchanged and is expected to be higher than the prior year supported by the completion of the SRO project and a strong second half.

Olympic Dam copper production for the September 2016 quarter decreased by 26 per cent to 41 kt, following planned maintenance and a state-wide power outage which commenced on 28 September 2016. The power outage and resultant shutdown at Olympic Dam demonstrates the necessity for secure and stable electricity supply in South Australia and across Australia. Power has safely been restored at Olympic Dam and operations are in the process of recommencing and expected to be fully ramped-up in the December 2016 quarter. Guidance for the 2017 financial year of approximately 200 kt is under review following the power outage.

Antamina copper production for the September 2016 quarter was broadly flat at 34 kt. Guidance for the 2017 financial year remains unchanged at 130 kt, as mining progresses through a zinc rich ore zone consistent with the mine plan. Zinc production is expected to increase from 55 kt to approximately 90 kt in the 2017 financial year.

Projects

Iron Ore

Production

(i) Represents Western Australia Iron Ore (WAIO). Excludes production from Samarco.

Iron ore - Total iron ore production for the September 2016 quarter was unchanged at 58 Mt on a BHP Billiton share basis, or 67 Mt on a 100 per cent basis. Guidance for the 2017 financial year remains unchanged at between 228 and 237 Mt on a BHP Billiton share basis, or between 265 and 275 Mt on a 100 per cent basis, with volumes weighted to the last three quarters of the year.

WAIO production for the September 2016 quarter was flat as the ramp-up of additional capacity at Jimblebar offset lower volumes at Yandi. The 24 month rail renewal and maintenance program, which will support the integrated supply chain's long-term reliability, is progressing on schedule. Completion of rail renewal works near Newman underpinned a four per cent increase in volumes from the June 2016 quarter.

The installation of the new primary crusher and additional conveying capacity at Jimblebar is expected to be completed in the December 2016 quarter, with all associated spend included within WAIO's long-term average annual sustaining capital expenditure of approximately US$4 per tonne.

Mining and processing operations at Samarco remain suspended following the failure of the Fundão tailings dam and Santarém water dam on 5 November 2015. During the September 2016 quarter 12 kt of pellet feed was sold, with additional sales expected in the December 2016 quarter.

Coal

Production

(i) Represents Queensland Coal. Excludes production from Haju following the IndoMet Coal divestment (2017 financial year: 102 kt).

(ii) Excludes production from New Mexico assets following completion of the divestments (2017 financial year: 451 kt).

Metallurgical coal - Metallurgical coal production for the September 2016 quarter increased by one per cent to 11 Mt. Guidance for the 2017 financial year remains unchanged at 44 Mt.

Queensland Coal production was broadly unchanged for the September 2016 quarter. Increased wash-plant and truck utilisation across all mines offset the completion of longwall mining at Crinum in the December 2015 quarter, adverse weather conditions, the planned longwall move at Broadmeadow and wash-plant shutdown at Saraji, and lower yield at South Walker Creek.

On 14 October 2016, the sale of the Group's 75 per cent interest in IndoMet Coal to its equity partner PT Alam Tri Abadi (Adaro) was completed.

Energy coal - Energy coal production for the September 2016 quarter decreased by four per cent to 7 Mt. Guidance for the 2017 financial year remains unchanged at 30 Mt.

New South Wales Energy Coal production declined by 15 per cent due to the impact of heavy rainfall and rescheduling of the mine plan based on individual pit economics. This partially offset a 16 per cent increase in volumes at Cerrejón compared to the September 2015 quarter which was constrained by drought conditions.

Subsequent to the completion of the divestment of Navajo Coal to Navajo Transitional Energy Company on 29 July 2016, no further production will be reported by BHP Billiton. BHP Billiton will continue to manage Navajo Coal in accordance with the Mine Management Agreement until 31 December 2016.

Following the Group's agreement with the New South Wales Government in August 2016 to cancel the exploration licence and cease progression of the Caroona Coal project, proceeds of A$220 million have been received.

Other

Nickel production

Nickel - Nickel West production for the September 2016 quarter decreased to 19 kt of nickel as in-process nickel matte stocks were replenished within the integrated production chain. Nickel production is still expected to increase by approximately 10 per cent in the 2017 financial year, with higher grade ore at Mt Keith and a ramp-up in mining at Leinster supporting higher utilisation rates at the Kalgoorlie smelter and Kwinana refinery.

Potash project

Minerals exploration

Variance analysis relates to the relative performance of BHP Billiton and/or its operations during the September 2016 quarter compared with the September 2015 quarter, unless otherwise noted. Production volumes, sales volumes and capital and exploration expenditure from subsidiaries are reported on a 100 per cent basis; production and sales volumes from equity accounted investments and other operations are reported on a proportionate consolidation basis.

The following footnotes apply to this Operational Review:

(1) Excludes production from Samarco, Haju (IndoMet Coal) and New Mexico Coal assets.

(2) In lieu of the drilling commitment for WA-475-P, consistent with Good Standing Agreement guidelines, we have committed to contributing A$10.47 million towards either a regional study, re-released acreage or sole-bid prime acreage.

Further information on BHP Billiton can be found at: bhpbilliton.com.

(1) LPG and ethane are reported as natural gas liquids (NGL). Product-specific conversions are made and NGL is reported in barrels of oil equivalent (boe). Total boe conversions are based on 6 bcf of natural gas equals 1 MMboe.

(2) Metal production is reported on the basis of payable metal.

(3) Shown on a 100% basis. BHP Billiton interest in saleable production is 57.5%.

(4) Includes Cerro Colorado and Spence.

(5) Iron ore production is reported on a wet tonnes basis.

(6) Shown on a 100% basis. BHP Billiton interest in saleable production is 85%.

(7) Metallurgical coal production is reported on the basis of saleable product. Production figures include some thermal coal.

(8) Shown on 100% basis. BHP Billiton interest in saleable production is 80%.

(9) Shown on 100% basis. BHP Billiton interest in saleable production is 75%.

(1) Total boe conversions are based on 6 bcf of natural gas equals 1 MMboe. Negative production figures represent finalisation adjustments.

(2) Other Australia includes Minerva and Macedon.

(3) Gulf of Mexico volumes are net of royalties.

(4) Onshore US volumes are net of mineral holder royalties.

(5) Other Americas includes Neptune, Genesis and Overriding Royalty Interest.

(6) BHP Billiton completed the sale of the Pakistan gas business on 31 December 2015.

(7) September 2015 includes (8) Mboe for the finalisation adjustment following the cessation of production at Stybarrow on 26 June 2015.