Annual production a mixed bag for BHP

BHP Billiton saw mixed results in its production numbers for the year to 30 June, with petroleum down 13% to 208 MMboe, copper off 16% at 1,326 kt, and metallurgical coal production 6% softer at 40 Mt.

The FTSE 100 firm did see a 4% uplift in iron ore production to 231 Mt, however, and a 7% improvement in energy coal production to 29 Mt, according to its operational review released on Tuesday.

Its board claimed to have achieved full year production guidance for petroleum and iron ore, with annual production records at Western Australia Iron Ore (WAIO), Spence and two Queensland Coal mines.

Lower copper production reflected the impact of industrial action at Escondida and the power outage and unplanned maintenance at Olympic Dam, BHP said, while the lower metallurgical coal volumes were said to be a result of damage to third party rail infrastructure caused by Cyclone Debbie.

BHP said it expected to achieve full year unit cost guidance at WAIO and Conventional petroleum, however industrial action and Cyclone Debbie had impacted unit costs at Escondida and Queensland Coal respectively.

“Our people have stepped up to unlock low-cost latent capacity and achieve strong productivity gains across our tier one assets,” said BHP chief executive officer Andrew Mackenzie.

“Improved productivity led to record annual production at Western Australia Iron Ore, Spence and two Queensland Coal mines while production guidance was achieved by Petroleum and Western Australia Iron Ore.

“Copper production is expected to rebound strongly in the 2018 financial year with the commissioning of the Escondida Water Supply project and ramp-up of the Los Colorados Extension project during the September 2017 quarter to enable utilisation of Escondida's three concentrators.”

Group copper equivalent production was expected to increase by 7% in the 2018 financial year, and in its onshore US division, development activity was increasing with up to 10 rigs operating in the 2018 financial year.

BHP also confirmed the divestment of non-core onshore US acreage was progressing, with the sale of a portion of the southern Hawkville anticipated in the September 2017 quarter.

In petroleum exploration, drilling of the Wildling-2 appraisal well in the Gulf of Mexico was continuing, with results expected in the September 2017 quarter.

The board claimed all “major projects” under development were tracking to plan.

“In Petroleum, the recently approved Mad Dog phase 2 project will extend low-risk oil volumes as supply tightens while in the near-term, onshore US development activity is to increase with up to 10 rigs planned for the 2018 financial year,” Andrew Mackenzie added.

“Our relentless focus on safety, productivity and capital discipline will support strong growth in shareholder value.”