BHP Billiton returns to black with $6.7 billion profit
22 Agosto 2017, 11:30 | Azura Castelo
Analysts at Deutsche Bank forecast BHP Billiton posting underlying earnings of US$20.3bn
Yet what most caught the market's attention was management's decision to exit its USA shale oil assets, possibly including via an IPO - following recent meetings between its new chairman, Ken Mackenzie and dozens of investors including activitist hedge fund Elliot Management.
Elliot Management and Tribeca, two fund managers, along with others have been pushing for the divestment of its shale business, along with higher returns for shareholders and eliminating the dual structured stock listings for London and Australia. The last stock price is up 10.66% from the 200-day moving average, compared to the Standard & Poor's 500 Index which has increased 0.05% over the same time period.
Chief executive Andrew Mackenzie told investors on Tuesday that all options were on the table for the under-performing USA shale activities.
The group added there were a number of parties interested in the assets, which BHP has now deemed "non-core". The company's market capitalization is GBX 72.70 billion. "And I think it's very appropriate that when we're able to do so, we reward them", Mr Mackenzie said.
Tyler Broda, an analyst with RBC Capital Markets, said cash flow came in better than expected for the company, adding the decision to leave its US shale assets behind with a good one.
The business has since seen another $US20 billion of spending, but has suffered a string of heavy write-downs, including more than $US10 billion of impairments over 2015 and 2016.
The miner said that it is exploring multiple alternatives but will only sell the assets for value. Lower value acreage has already been sold.
BHP also today announced a global multi-currency bond repurchase plan - comprising of two separate transactions, one targeting certain bonds issued under BHP's United States debt capital markets programme and another targeting certain bonds issued under the Euro Medium-Term Notes Programme.
BHP Chief Executive Officer, Andrew Mackenzie, said, "This strong momentum will be carried into the 2018 financial year, with volume growth of seven per cent and further productivity gains expected". "However, with value as our guide, we will be patient as we pursue options to exit our position". "In the meantime, we will complete well trials, acreage swaps and assess midstream solutions to increase the value, profitability and marketability of our acreage". The company said it is important to develop future options, but in a disciplined way.
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