Iron ore the silver lining of depressed BHP Billiton production

The FTSE 100 company also saw an increase in metallurgical coal production - up 1% to 21 Mt - though all other sectors were softer, with energy coal down 4% to 14 Mt, copper reducing 7% to 712 kt, and petroleum production falling 15% to 106 MMboe.

Full year production guidance was maintained for petroleum, iron ore and coal, while production guidance for copper was reduced to approximately 1.62 Mt - 2% below prior guidance - reflecting lower volumes now expected at Olympic Dam.

In Petroleum, following the successful bid for Trion in Mexico and positive drilling results at LeClerc and Caicos, an $820m exploration program was now planned for the current financial year.

BHP said all major projects under development were tracking to plan.

The Bass Strait Longford Gas Conditioning Plant project achieved initial gas sales in the December 2016 quarter, and mechanical completion was achieved at the Escondida Water Supply project with first water expected in the March 2017 quarter.

Underlying attributable profit in the December 2016 half year was expected to include gains related to asset divestments, in a range of approximately $150m to $200m, the company’s board reported.

“We have performed well during a period of higher prices, with record iron ore volumes achieved at WAIO,” said chief executive Andrew Mackenzie.

“Our simpler organisational structure has freed our assets to focus on what matters most and to deliver safer and more productive operations.

“Our consistent delivery of operating and capital productivity, and strict adherence to our capital allocation framework have positioned us to maximise shareholder value.”

In Petroleum, Mackenzie said the company will accelerate its counter-cyclical oil exploration efforts during the current year.

“Our successful Trion bid leaves us in a leading position to develop the newly opened Mexican acreage in the Gulf of Mexico, where we can leverage our core expertise.

“We are encouraged by recent positive drilling results at the LeClerc well in Trinidad and Tobago and the Caicos well in the Gulf of Mexico.

“After the first successful rig, our onshore US gas hedging program will also be expanded to secure attractive returns.”