BHP to quit US shale business as annual profit surges
Miner’s decision to exit underperforming business likely to please shareholders
BHP Billiton chief executive Andrew Mackenzie before releasing the full-year results to the media and analysts at the company’s headquarters in Melbourne on Tuesday. Photograph: Joe Castro/EPA
BHP Billiton, the world’s largest miner, reported a surge in underlying full-year profit on Tuesday and said it would exit its underperforming US shale oil and gas business, pleasing disgruntled shareholders who called for a sale.
The Anglo-Australian mining giant, which is under pressure from US hedge fund Elliott Management to rethink its investment in oil and boost shareholder returns, was buoyed by a recovery in industrial commodities markets.
It generated more cash than even in some years of the mining boom, slashed net debt by nearly $10 billion (€8.5 billion) to $16.3 billion and tripled its final dividend to $0.43 a share.
Facing calls from some shareholders to dispose of the shale business it acquired at the height of the oil boom, the miner said it was working on an exit over the next two years.
Chief executive Andrew Mackenzie said the preference would be a small number of trade sales. Other options could include a demerger or asset swaps.
BHP’s underlying profit surged from $1.2 billion a year ago as it benefited from a 32 percent rise in iron ore pricing in fiscal 2017, owing to greater demand from Chinese steelmakers, which buy the bulk of its ore.
Prices for copper, oil, coal, nickel and other commodities were also up, with only liquefied natural gas weaker.