BHP Biliton Plc (LON:BLT), today announced operational review quarter ended 30th September 2018.
· Group copper equivalent production increased by 2% in the September 2018 quarter despite maintenance across a number of operations. Volumes for the 2019 financial year are expected to be broadly in line with last year(1).
· Full year production guidance remains unchanged for petroleum, iron ore, metallurgical coal and energy coal. Total copper production guidance reduced by approximately 3% to between 1,620 and 1,705 kt reflecting lower volumes now expected at Spence (electro-winning plant outage) and Olympic Dam (acid plant outage).
· Unit cost guidance(2) maintained for all major assets for the 2019 financial year.
· All major projects under development are tracking to plan.
· In Petroleum, the Victoria-1 and Bongos-2 exploration wells in Trinidad and Tobago, and the
Samurai-2 well in the US Gulf of Mexico, encountered hydrocarbons. A sidetrack of the Samurai-2 well is currently being drilling to further appraise the discovery.
· Onshore US sale process is on track to be completed by the end of October 2018, with the Fayetteville transaction completed on 29 September 2018. The net proceeds from the sale of our Onshore US assets are expected to be returned to shareholders.
|
Production
|
Sep Q18
|
vs Sep Q17
|
Sep Q18 commentary
|
|
Petroleum (MMboe) |
33 |
(1%) |
Higher natural gas volumes at Trinidad and Tobago offset by natural field decline and planned maintenance at Pyrenees. |
|
Copper (kt) |
409 |
1% |
Higher volumes at Escondida supported by the utilisation of the three concentrators, offset by the impact of planned maintenance and a fire at Spence, and an acid plant outage at Olympic Dam. |
|
Iron ore (Mt) |
61 |
10% |
Higher volumes at WAIO supported by record quarterly production at Jimblebar and improved reliability across our rail network and port operations. |
|
Metallurgical coal (Mt) |
10 |
(2%) |
Record stripping and truck performance at BMA offset by the impact of planned maintenance across both port and mine operations. |
|
Energy coal (Mt) |
7 |
(1%) |
Improved stripping fleet performance at New South Wales Energy Coal offset by lower bypass coal and a higher average strip ratio. |
BHP Chief Executive Officer, Andrew Mackenzie, said: “We delivered a two per cent increase in copper equivalent production despite maintenance at a number of our operations. We are on track to meet guidance for the 2019 financial year across our commodities, except copper where we have reduced production guidance slightly following outages at Olympic Dam in Australia and Spence in Chile. In petroleum, we have extended our exploration success and encountered hydrocarbons in three wells. The Onshore US sale process is progressing to plan and is expected to be completed by the end of October 2018.”
Summary
Operational performance
Production for the September 2018 quarter and guidance for the 2019 financial year are summarised in the table below.
|
Production
|
Sep Q18
|
Sep Q18
|
Sep Q18
|
Previous FY19
|
Current FY19
|
|
|
Continuing operations |
||||||
|
Petroleum – Conventional (MMboe) |
33 |
(1%) |
15% |
113 – 118 |
113 – 118 |
Unchanged |
|
Copper (kt) |
409 |
1% |
(12%) |
1,675 – 1,770 |
1,620 – 1,705 |
Reduced |
|
Escondida (kt) |
295 |
10% |
(7%) |
1,120 – 1,180 |
1,120 – 1,180 |
Unchanged |
|
Other copper(i) (kt) |
114 |
(16%) |
(23%) |
555 – 590 |
500 – 525 |
Olympic Dam now 170 – 180 kt; previously 200 – 220 kt Spence now 160 – 175 kt; previously 185 – 200 kt |
|
Iron ore (Mt) |
61 |
10% |
(3%) |
241 – 250 |
241 – 250 |
Unchanged |
|
WAIO (100% basis) (Mt) |
69 |
8% |
(4%) |
273 – 283 |
273 – 283 |
Unchanged |
|
Metallurgical coal (Mt) |
10 |
(2%) |
(14%) |
43 – 46 |
43 – 46 |
Unchanged |
|
Energy coal (Mt) |
7 |
(1%) |
(26%) |
28 – 29 |
28 – 29 |
Unchanged |
|
Discontinued operations |
||||||
|
Petroleum – Onshore US (MMboe) |
20 |
16% |
(2%) |
Refer footnote(ii) |
||
(i) Other copper comprises Pampa Norte (including Cerro Colorado production for the first half of the 2019 financial year), Olympic Dam and Antamina.
(ii) Given our announcement to exit Onshore US, no annual guidance for the 2019 financial year for these assets will be provided; however, until sale completion, we expect a production run rate broadly consistent with the second half of the 2018 financial year.
Major development projects
At the end of the September 2018 quarter, BHP had five major projects under development in petroleum, copper, iron ore and potash, with a combined budget of US$10.6 billion over the life of the projects.
Corporate update
On 18 September 2018, BHP released its Economic Contribution Report which shows the Group’s direct economic contribution globally in the 2018 financial year was US$33.9 billion. This includes US$7.8 billion in taxes, royalties and other payments to governments. BHP’s adjusted effective tax rate in the 2018 financial year was 31.4 per cent. When royalties are included, the rate was 39.9 per cent.
