BHP Billiton Ltd., Australia’s largest oil and gas producer, expects to produce more petroleum liquids from its onshore acreage in the U.S. after natural gas prices slumped to the lowest in a decade.
“In the current environment of depressed gas prices, we will continue to focus our efforts on the most productive areas of our high-quality acreage,” the Melbourne-based company said in its first-half earnings statement today. Liquids such as shale oil will account for 20 percent of its onshore U.S. output by 2015, BHP said without providing a comparative figure.
BHP, also the world’s largest mining company, said it plans to more than double full-year spending on petroleum exploration to $1.4 billion after buying U.S. shale assets last year. BHP bought Petrohawk Energy Corp. for $12.1 billion in cash and purchased assets from Chesapeake Energy Corp. for $4.75 billion.
First-half underlying profit before interest and tax for the oil and gas division, led by Chief Executive J. Michael Yeager, climbed 38 percent to $3.94 billion on an increase in oil prices, BHP said today. The average realized natural-gas price was “largely unchanged” at $3.85 per thousand standard cubic feet, according to the company.
“What Mike wants to do is probably less gas activity than he planned and probably on balance slightly more oil activity,” BHP’s Chief Executive Officer Marius Kloppers told reporters on a conference call today.
U.S. natural gas prices have dropped to a 10-year low, while oil prices gained 40 percent in the past two years. Royal Dutch Shell Plc, Europe’s largest energy company, will shift its investment focus to oil-rich shale in the U.S. because of lower natural-gas prices, the company said Feb. 2.