Miner BHP to focus on growing oil and gas division after exiting shale

Petroleum business looks to bounce back after shale misadventure

Anglo-Australian miner BHP has talked up its oil and gas plans to investors, claiming its petroleum business is set to deliver strong returns throughout the 2020s and beyond.

Speaking to analysts Geraldine Slattery, president operations petroleum, shrugged of concerns around decarbonisation, saying oil would remain "attractive for decades". She said the company’s oil and gas production would grow from an average of around 110 million barrels of oil equivalent (boe) to 170 million boe by 2026-2027.

In an optimistic scenario, BHP outlined potential EBITDA margins of more than 60 per cent and an average return on capital employed of more than 15 per cent over the next decade.

“Our portfolio of quality assets and pipeline of competitive growth options are expected to generate strong free cash flow and returns through the 2020s and beyond,” Slattery said.

The upbeat assessment comes with BHP still recovering from its loss-making seven-year foray into US shale, which ended last year after the company sold most of its assets to BP.

Future performance will depend to a large extent on the success of new projects that are still in the pipeline. Slattery singled out projects such as the Wildling oil project in the Gulf of Mexico, the Trion oil venture in Mexico and the large Trinidad & Tobago North gas project. These projects would more than make up for declining production at some of BHP’s legacy operations.

“Our capabilities in safety, exploration and deepwater operations coupled with a high-performance culture give us confidence that we can deliver on our plans into the future,” Slattery said.

FURTHER READING: World's biggest miner votes to stay in fossil fuel lobby groups

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