Production down but guidance unchanged at BHP Billiton

19th Oct 2016 07:10

(ShareCast News) - BHP Billiton posted its operational review for the three months to 30 September on Wednesday, with all of its production and unit cost guidance remaining unchanged for the 2017 financial year - though guidance for the Olympic Dam was under review after a state-wide power outage in South Australia.The FTSE 100 firm reported a 15% drop year-on-year for petroleum production in the quarter, to 55 Mboe, with copper down 6% to 355 kt and iron ore flat at 58 Mt.Metallurgical coal was an exception, rising 1% to 11 Mt, while energy coal was off 4% to 7 Mt.BHP reported "good progress" continues on its latent capacity options, with the ramp-up of the Spence Recovery Optimisation project and additional capacity at Jimblebar during the period, and first production from the Los Colorados Extension project anticipated late in the 2017 financial year.All four major projects under development were tracking to plan, with positive drilling results reported following the discovery of oil in multiple horizons at the Caicos exploration well in the Gulf of Mexico as well.The board said it was continuing to optimise its portfolio with the announced sale of 50% of its interest in the undeveloped Scarborough area gas fields and completion of the IndoMet Coal and Navajo Coal divestments.It also entered into an agreement with the New South Wales Government to cease progression of the Caroona Coal project."Full year production and unit cost guidance remains unchanged," said CEO Andrew Mackenzie."Safety and productivity continue to improve with our new operating model helping us identify and replicate best practice more quickly."Mackenzie said the board has seen early signs of markets rebalancing, with fundamentals suggesting both oil and gas markets will improve over the next 12 to 18 months."Iron ore and metallurgical coal prices have been stronger than expected, although we continue to expect supply to grow more quickly than demand in the near term."Together, the combination of steadier markets, continued capital discipline, improved productivity and increased volumes in copper, iron ore and metallurgical coal should further support strong free cash flow generation this financial year."