BHP sees copper and petroleum declines but maintains positive outlook

The FTSE 100 company released its operational review for the quarter.

Petroleum production dropped by 4% compared to the previous year but was up 2% on the previous quarter to 65 million barrels of oil equivalent.

It was down due to industrial action at Bass Strait and natural field decline across the portfolio.

The company also blamed lower onshore US gas volumes on the decision to defer development activity for longer-term value.

Copper production declined to 0.4m tonnes, down 2% from 2014 but a bigger drop of 13% since June due to anticipated grade decline at Escondida.

Iron ore was the only business to increase production, up 7% on the previous year’s figures to 61m tonnes.

Production of metallurgical coal and energy coal remained flat at 10m tonnes each.

Despite the numbers, BHP Billiton chief executive Andrew Mackenzie said the group remains on track to meet full-year production after a “solid operational performance”.

"In petroleum, we continue to reduce costs in both our onshore US and conventional businesses, and will meet our production targets with $200m less capital investment.

"We successfully acquired prospective oil acreage in Western Australia and the Western Gulf of Mexico and will continue to invest through the cycle to create value for shareholders."

Shore Capital said based on the company's full-year guidance, the quarterly results were slightly disappointing overall.

"BHP’s maintaining its full-year guidance implies to us that iron ore, copper and coal results in the following quarters should improve over that in Q1 FY2016, whereas petroleum could be expected to decline."