Thomas Biesheuvel
Tue, September 14, 2021,
(Bloomberg) -- Copper might be BHP Group’s most prized metal, but the world’s biggest mining company spent little more than it earned in an average 12-hour period last year exploring for new deposits.
The company spent just $53 million looking for the metal last year, when it posted record profit of $37.4 billion. In total it spent $516 million on exploration, with more than two-thirds directed at oil and gas, a business it’s in the process of exiting.
The world’s biggest miners are universally bullish on copper, expecting a surge in demand as the global economy decarbonizes, while long-term supply looks constrained by the lack of new mine development. Yet part of the reason copper is so favored by miners and investors alike is because new deposits have been so hard to find.
Still, BHP does have growth plans in copper, but from buying into smaller developers rather then spending a fortune on exploration.
The company has built a stake in SolGold Plc, which is developing Ecuador’s Cascabel project, potentially one of the biggest copper mines in the world. BHP is also in the process of trying to buy Noront Resources Ltd. to gain control of a nickel project in Canada.
The company expects its total exploration spend to jump to $800 million this year.
BHP handing unexpectedly small $3.9 billion clean-up tab to Woodside in oil merger
BHP's logo is projected on a screen during a round-table meeting with journalists
In this article:
Sonali Paul
Mon, September 13, 2021
MELBOURNE (Reuters) - BHP Group will transfer a smaller-than-expected $3.9 billion in oil and gas decommissioning liabilities to Woodside when it merges its petroleum business with the independent Australian gas producer.
Woodside's shares jumped 6.5% after the figure was disclosed in BHP's annual report on Tuesday, outperforming gains of around 4% among its peers.
"The long awaited BHPP (BHP Petroleum) abandonment provision number has been released, coming in below what we feared it could be," Credit Suisse analyst Saul Kavonic said in a note.
BHP said in its annual report that as of June 2021, its petroleum assets included "property plant and equipment and closure and rehabilitation provisions of approximately $11.9 billion and $3.9 billion, respectively".
When the merger was announced in August, investors had raised concerns as Woodside declined to reveal the rehabilitation liabilities that were assumed in setting the deal terms with BHP's petroleum business to create a global top-10 independent oil and gas company.
The oil and gas rehabilitation provisions, which are estimates of the cost of removing platforms and pipelines and cleaning up sites at the end of their lives, make up about one-third of BHP's total closure and rehabilitation provisions of $11.9 billion for all its assets.
Kavonic said he had assumed Woodside might inherit as much as $5 billion to $7 billion in decommissioning liabilities in the merger with BHP's petroleum arm, which comprises assets in Australia, the Gulf of Mexico, Trinidad and Tobago, and Algeria.
Citi had estimated BHP's decommissioning liabilities in Australia's Bass Strait alone at $3.4 billion.
Once tax offsets are taken into account, the actual decommissioning cost may be below $1 billion, Kavonic said, adding that those costs could be deferred through reusing sites for activities such as carbon capture and storage or offshore wind in the future.
In this article:
Sonali Paul
Mon, September 13, 2021
MELBOURNE (Reuters) - BHP Group will transfer a smaller-than-expected $3.9 billion in oil and gas decommissioning liabilities to Woodside when it merges its petroleum business with the independent Australian gas producer.
Woodside's shares jumped 6.5% after the figure was disclosed in BHP's annual report on Tuesday, outperforming gains of around 4% among its peers.
"The long awaited BHPP (BHP Petroleum) abandonment provision number has been released, coming in below what we feared it could be," Credit Suisse analyst Saul Kavonic said in a note.
BHP said in its annual report that as of June 2021, its petroleum assets included "property plant and equipment and closure and rehabilitation provisions of approximately $11.9 billion and $3.9 billion, respectively".
When the merger was announced in August, investors had raised concerns as Woodside declined to reveal the rehabilitation liabilities that were assumed in setting the deal terms with BHP's petroleum business to create a global top-10 independent oil and gas company.
The oil and gas rehabilitation provisions, which are estimates of the cost of removing platforms and pipelines and cleaning up sites at the end of their lives, make up about one-third of BHP's total closure and rehabilitation provisions of $11.9 billion for all its assets.
Kavonic said he had assumed Woodside might inherit as much as $5 billion to $7 billion in decommissioning liabilities in the merger with BHP's petroleum arm, which comprises assets in Australia, the Gulf of Mexico, Trinidad and Tobago, and Algeria.
Citi had estimated BHP's decommissioning liabilities in Australia's Bass Strait alone at $3.4 billion.
Once tax offsets are taken into account, the actual decommissioning cost may be below $1 billion, Kavonic said, adding that those costs could be deferred through reusing sites for activities such as carbon capture and storage or offshore wind in the future.
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