Speaking at an investor briefing in London on Oct. 5, Steve Pastor, BHP Billiton’s president of petroleum operations, said having both minerals and petroleum in the company’s portfolio allows the company to maximize the value of our petroleum assets at the right point in the cycle.” The company has operations in Arkansas.
“While currently well supplied, underlying fundamentals suggest both oil and gas markets are improving more quickly than our minerals commodities,” Pastor said. “Over the next decade, demand growth, natural field decline and the effects of industry wide investment deferrals are expected to create a significant opportunity to invest and maximize value in oil. By 2025 the world is expected to consume more than 100 million barrels of liquids per day – a third of which would come from new sources.”
Concerning the company’s U.S. shale operations, which includes more than 700 undeveloped wells in the Fayetteville and Haynesville shale plays, Pastor said the company operates those assets to maximize value rather than volumes and will continue to adjust its investment plans to reflect market conditions.
“We are well placed to capitalize on this opportunity. We have a large, high quality resource base. Our focus on productivity has significantly reduced both operating and capital costs, supporting a range of shale and conventional investment opportunities that would generate compelling returns at today’s prices.”
As a result, Pastor said BHP now has have up to 1,200 undrilled net oil wells, contingent upon trials in the Eagle Ford, and 220 undrilled net gas wells that generate a minimum 15% internal rate of return at $50 per barrel for oil and $3 per million British thermal units (MMbtu) for natural gas
“Our Onshore US business gives us valuable flexibility. Our shale assets generate cash at current prices, with significant upside should oil and gas prices recover as we expect,” Pastor said. “We operate in the heart of some of the best shale plays and by further reducing costs and improving capital efficiency to levels among the best in the industry, we have increased our investible well inventory.”