BHP fourth-quarter and full-year update

BHP Billiton Limited

BHP Details

FY17 production impacted by cyclone Debbie: Total iron ore production for FY17 increased by 4% to 231 Mt, or 268 Mt on a 100% basis, and WAIO (Western Australia Iron Ore) production is expected to increase by 239-243 Mt, or 275-280 Mt on a 100% basis in FY18. Further, BHP will continue to work with the relevant authorities to obtain the necessary approvals to increase system capacity to 290 Mtpa. Total petroleum production decreased by 13% to 208 Mmboe, and further estimated to decrease by 180-190 MMboe in FY18. In Onshore US, volumes are expected to decline 61-67 MMboe as production from the phased ramp up of development activity is more than offset by natural field decline. However, the expanded rig program is forecasted to deliver production growth of approximately 35% in FY19.


Operational performance; (Source: Company reports)

Total copper production decreased by 16% to 1.3 Mt, due to 21% decline in Escondida copper production to 772 kt, led by a four-day site-wide suspension of operations following a fatality in October 2016, 44 days of industrial action in the March 2017 quarter and severe weather in early June 2017. However, in FY18, copper production is expected to increase by 1,130 - 1,230 kt, supported by the ramp-up of the Los Colorados Extension project during the September 2017 quarter, enabling utilization of three concentrators. Crude oil, condensate and natural gas liquids production for FY17 declined by 16% to 97 MMboe. Onshore US liquids volumes decreased by 29% to 34 MMboe as value accretive deferral of activity in the Black Hawk and natural field decline across all fields were partially offset by increased production from the Permian. Conventional liquids volumes decreased by 8% to 63 MMboe as an additional infill well at Mad Dog and higher production at North West Shelf and Algeria partially offset planned maintenance at Atlantis and natural field decline across the portfolio


Average realized prices; (Source: Company reports)

Major development projects: During the year, the Bass Strait Longford Gas Conditioning Plant was fully commissioned and is running at design capacity, enabling full production from the Turrum and Kipper fields. The BHP Board also approved the Mad Dog Phase 2 project in the deepwater Gulf of Mexico. The Escondida Water Supply project achieved mechanical completion in the December 2016 quarter and was transitioned to operations effective 1 July 2017, following completion of project commissioning in June 2017. At the end of the 2017 financial year, BHP had three major projects under development in Petroleum and Potash, with a combined budget of US$5.1 billion over the life of the projects. BHP expects to record exceptional items of US$546 million (US$740 million post-tax) in the second half of the FY17, relate to idle capacity and other strike-related costs incurred as a result of the Escondida industrial action in the March 2017 quarter and Chilean withholding tax on a one-off dividend paid while a concessional tax rate was available.
 

BHP Daily chart; (Source: Thomson Reuters)

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