Energy In-depth: Fayetteville Shale operator BHP Billiton reports worst loss in company’s history

Editor’s note: Each Friday, Talk Business & Politics provides “Energy In-depth,” a round-up of energy and regulatory news.

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FAYETTEVILLE SHALE OPERATOR BHP BILLITON REPORTS WORST LOSS IN COMPANY’S HISTORY
BHP Billiton, the second-largest operator in the Fayetteville Shale, reported the biggest loss in the company’s history as weak iron ore, copper, coal, oil and gas prices across the globe decimated the Australian mining and energy giant’s balance sheet.

For the fiscal year ended June 30, BHP reported a loss of $6.2 billion, compared to earnings of nearly $8.7 billion a year ago. Companywide, capital and exploration expenditures declined by 42% to $6.4 billion and is expected to decrease further to $5 billion in the 2017 financial year.

“The last 12 months have been challenging for both BHP Billiton and the resources industry,” said BHP CEO Andre MacKenzie. “Nevertheless, our results demonstrate the resilience of our portfolio and the diverse ways in which we can create value for shareholders despite low commodity prices.”

Going forward, BHP has essentially shuttered production in the Arkansas shale play, cutting spending by 50% in its entire U.S. onshore drilling and development operations to only $2.5 billion. According to the company’s balance sheet, the company spend nearly $50 million in the Arkansas shale play in fiscal 2016, down 73% from $183 million a year ago. BHP only plans to spend $1.4 billion in the U.S. oil and gas sector in fiscal 2017.

SWEPCO SEEKING BIDS FOR RENEWABLE ENERGY PROJECTS
AEP Southwestern Electric Power Company (SWEPCO) has announced a Request for Proposals (RFP) for the purchase of wind energy assets as the company seeks to add more renewable energy to its diverse resource mix. Proposals for up to 100 megawatts, with a minimum nameplate rating of 80 megawatts, are due Sept. 15, 2016. SWEPCO is seeking bids for projects that can be placed in commercial operation by Dec. 31, 2018.

“With the potential purchase of newly completed wind energy facilities, we are continuing SWEPCO’s strategy of diversifying our resource mix to provide reliable and affordable electricity for our customers in Arkansas, Louisiana and Texas,” said Venita McCellon-Allen, SWEPCO president and COO.

SWEPCO already has 469 megawatts of wind energy through purchase power agreements. With this RFP, projects must be interconnected to the Southwest Power Pool (SPP) and located in Arkansas, Louisiana, Texas, Oklahoma, Kansas or Missouri. Any projects selected through the RFP process will be reviewed for regulatory approval by the Arkansas Public Service Commission, and utility regulators in Louisiana and Texas.

OPEC NET OIL EXPORT REVENUE IN 2015 DROPS TO LOWEST LEVEL SINCE 2004
Members of the Organization of the Petroleum Exporting Countries (OPEC) earned $404 billion in net oil export revenue in 2015, according to recently published U.S. Energy Information Administration (EIA) estimates. This represents a 46% decline from the estimated $753 billion earned in 2014 and a 56% drop from the estimated $921 billion revenue received in 2012. While these net export earnings include Iran’s revenues, they are not adjusted for possible price discounts that Iran may have offered its customers between late 2011 and January 2016, when nuclear-related sanctions targeting Iran’s oil sales were in place.