BHP Billiton's much maligned $20 billion shale oil and gas acquisitions are bearing fruit. Source: AAP
BHP Billiton's much maligned $20 billion shale oil and gas acquisitions are bearing fruit.
BHP said its biggest oil producing field was not a typical offshore one, but an unconventional onshore shale field: Eagle Ford.
The company revealed an unexpected 15 per cent leap in liquids production to more than five million barrels of oil equivalent (mboe)in the March quarter, compared to analysts' estimates of just three million.
The shale revolution has convinced some analysts that it will change global geopolitics because the US, the world's largest economy, would no longer be dependent on other countries for energy fuel.
One analyst said that US shale gas prices had also recently climbed above $4 per million British thermal units (mmbtu) for the first time in more than 20 months.
That is more than double the price in early 2012 when BHP was forced to write down the value of its Fayetteville shale gas assets by $2.8 billion from the $4.75 billion it paid for them, leading to criticism of outgoing boss Marius Kloppers.
"They have got increasing volume coming out from shale in a recovering pricing market," the analyst, who did not want to be named, said.
"I think shale is going to continue to be a division that probably surprises a few people over the next 12-18 months ... who said they paid the wrong price for it and have been pretty negative on it."
BHP chairman Jac Nasser called on the US last week to relax restrictions on oil and gas exports.
BHP shares fell 15 cents to $32 on Wednesday with resources stocks being punished all week due to weaker commodity prices.
BHP confirmed it would spend $4 billion this year on onshore drilling focussed on the oil-rich Eagle Ford and Permian Basin areas, $US3.2 billion of which has been spent.
The outlook for oil and gas prices is positive and BHP's petroleum division - which represents about one-third of earnings - is closing the gap on top earner, iron ore.
Production in the March quarter of 55.42 mboe was below some expectations, due to weather and maintenance issues with its West Australian and US offshore operations.
Production guidance for about 240 mboe was unchanged.
BHP also said it was on track to produce a record 183 million tonnes in Western Australian for the year.
The world's third-largest iron ore producer shipped 44.4 million tonnes and produced 44.2 million tonnes, having been less affected by WA's cyclone season than rival Rio Tinto.
Production was five per cent lower than the previous quarter but three per cent higher for the same period last year.
Iron ore prices were consistently stronger during the quarter than late last year at above $US140 a tonne, but many analysts expect them to drop as supply ratchets up in the second half of the year.
Goldman Sachs analysts told clients in a research note that the nine million tonnes of coking coal produced was impressive despite adverse Queensland weather, up 22 per cent from same period in 2012.
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