Bhp Billiton 9 month operational review

A diversified natural resources company and among the world’s largest producers of major commodities, including aluminium, coal, copper, iron ore, manganese, nickel, silver and uranium, and has substantial interests in oil and gas.  I have a holding in my income portfolio (epic code: BLT).

Bhp Billiton released their nine month operational review yesterday.  Group production increased by 9% for the period.  Management say they remain on track to deliver Group production growth of 16% over the two years to the end of the 2015 financial year.

 

By commodity: Petroleum production increased by 6% to a record 192.5 MMboe and guidance for the 2015 financial year remains unchanged at 255 MMboe, a 4.9% increase on last year.  Copper production increased by 1% to 1.27 Mt and production for the 2015 financial year is now expected to be 1.7mt, the same as last year.  Iron Ore production increased by 17% to 172.4 Mt and production for the 2015 financial year is now expected to be 230 Mt, an increase of 12.7% on last year.  Metallurgical coal production increased by 14% to 37.8 Mt and production for the 2015 financial year is now expected to be 49 Mt, an increase of 8.9% on last year.

 

The guidance for full year zero growth in copper production (prior guidance was for growth of over 6%), reflects the impact of heavy rainfall in Northern Chile in March 2015 and an electrical failure which caused a mill outage at Olympic Dam in January 2015.  The company reduced  the onshore US operated rig count from 26 to 17 during the third quarter, in line with their plan to reduce the operated rigs to 16 by June 2015.

 

The proposed demerger of South32 (BLT's aluminium, coal (energy), manganese, nickel and silver assets) is also on track and, if approved on 6th May, will see shareholders receive one share in South32 for every share they hold in BLT on 15th May.  BLT are providing a free dealing facility for any shareholder who owns 10,000 or fewer BLT shares to sell their South32 shares, if they do not wish to own them.  I will probably use this facility, as my resultant holding in South32 will be too small and they have no independent performance history to encourage me to increase my holding.