Bhp Share Discussion Threads

[waldron] 22/1/2019 14:49

BHP Group, one of the world's largest mining companies, released its results for the financial quarter ended Dec. 31 late on Monday. In its report, the company maintained its production guidance for petroleum, iron ore and coal, but boosted its total copper production guidance. Here are some other remarks from the report.



On productivity:



"Productivity for the December 2018 half-year has been impacted by unplanned production outages at Olympic Dam, Spence and Western Australia Iron Ore, with a total negative impact of approximately $600 million."



On petroleum:



"Guidance for the 2019 financial year remains unchanged at between 113 and 118 million barrels, with volumes expected to be toward the upper end of the guidance range. Crude oil, condensate and natural gas liquids production declined by 5% to 29 million barrels due to natural field decline across the portfolio and a 70 day planned dry dock maintenance program at Pyrenees completed during the September 2018 quarter. This decline was partially offset by higher uptimes at our Gulf of Mexico assets. Natural gas production was broadly flat at 206 bcf, reflecting increased tax barrels at Trinidad and Tobago in accordance with the terms of our Production Sharing Contract."



On petroleum exploration:



"In the Western US Gulf of Mexico, the Ocean Bottom Node seismic acquisition is expected to be completed in the March 2019 quarter. This is the world's first deepwater exploration ocean bottom node seismic acquisition...BHP was successful in its bids to acquire a 100% interest in, and operatorship of, two exploration licenses for blocks 8 and 12 in the Orphan Basin, offshore Eastern Canada. BHP's aggregate bid amount of $625 million reflects the costs of the drilling and seismic work likely to be performed during the exploration phase, although there is no minimum work program under the licence agreements...Petroleum exploration expenditure for the December 2018 half-year was $316 million, of which $166 million was expensed. A $750 million exploration and appraisal program is being executed for the 2019 financial year."



On copper:



"Total copper production decreased by 1% to 825 kt. Guidance for the 2019 financial year has been increased to between 1,645 and 1,740 kt and reflects the retention of Cerro Colorado. Escondida copper production was broadly unchanged at 580 kt as higher concentrator throughput and improved recoveries offset the impact of expected lower copper grades. Production guidance remains unchanged at between 1,120 and 1,180 kt for the 2019 financial year."



On iron ore:



"Total iron-ore production increased by 2% to 119 Mt--135 Mt on a 100% basis. Guidance for the 2019 financial year remains unchanged at between 241 and 250 Mt, or between 273 and 283 Mt on a 100% basis."



On coal:



"Metallurgical coal production increased by 2% to 21 Mt. Guidance for the 2019 financial year remains unchanged at between 43 and 46 million tons, with volumes weighted to the second half of the year as expected. At Queensland Coal, increased production was supported by record production at South Walker Creek and higher wash-plant throughput at Poitrel following the purchase of the Red Mountain processing facility..Energy coal production decreased by 5% to 13 million tons. Guidance for the 2019 financial year remains unchanged at approximately 28 to 29 million tons. New South Wales Energy Coal production decreased by 4% as a result of a higher average strip ratio."



On ongoing projects:



"During the December 2018 quarter, the North West Shelf Greater Western Flank-B project achieved first production ahead of schedule and under budget. The North West Shelf Greater Western Flank-B project will not be reported in future Operational Reviews. At the end of December 2018, BHP had five major projects under development in petroleum, copper, iron ore and potash, with a combined budget of $10.6 billion over the life of the projects."



Write to David Hodari at [e-mail]



(END) Dow Jones Newswires

January 22, 2019 09:14 ET (14:14 GMT)

[waldron] 22/1/2019 06:39

SYDNEY--BHP Group Ltd. (BHP.AU) recorded weaker quarterly production of commodities including iron ore and petroleum and forecast a first-half productivity hit totaling US$600 million because of disruptions to operations that included a train derailment in a remote part of Australia.

The company also raised its full-year forecast for copper production after it called off the sale of its Cerro Colorado copper mine in Chile.

BHP, the world's biggest miner by market value, on Tuesday said it produced 58 million metric tons of iron ore in the three months through December, down 6% on the same period a year earlier.

In November, BHP was forced to derail a runaway train consisting of four locomotives and 268 loaded wagons that ran loose for more than 50 miles without a driver. The train rolled away after its operator disembarked to inspect one of the wagons and didn't secure a brake.

BHP temporarily suspended all of its rail operations in the Pilbara to investigate the incident and recover the rogue train.

The derailment helped to prop up iron-ore prices, which have been trading above analyst expectations as China continues to produce massive amounts of steel. China's steel-product output rose 8.5% last year.

BHP's Australian iron-ore shipments account for almost one-fifth of seaborne trade in the commodity. It is the world's third-largest iron-ore exporter, behind Vale SA (VALE) and Rio Tinto PLC (RIO.LN).

BHP said its productivity drive, aimed at working its mines and infrastructure network harder, had also been set back in the half by a plant outage at its Olympic Dam copper mine in Australia and a plant fire at its Spence mine in Chile.

BHP meantime raised its full-year copper production forecast to between 1.645 million tons and 1.740 million tons to reflect the retention of Cerro Colorado. It reported a 2% rise in second-quarter copper output, to 416,000 tons.

The company also recorded a sharp fall in quarterly petroleum production tied to lower gas sales. It said second-quarter output of petroleum products fell by 8% to 30 million barrels of oil equivalent.



Write to Rhiannon Hoyle at [e-mail]



(END) Dow Jones Newswires

January 21, 2019 17:19 ET (22:19 GMT)

[loganair] 10/1/2019 10:09

Special Dividend went 'ex' today.

[stevenrevell] 10/1/2019 09:58

Why the drop

[loganair] 06/1/2019 18:44

Any share drops in price after any dividend is paid as the value of the company drops by the amount of money paid out.

[p0pper] 06/1/2019 07:53

Not having had a special dividend before, will the BHP share price drop after this dividend as per usual divi's or as this is a one off will the share price remain the same? thanks to anyone in advance who knows the answer.

[cheshire pete] 05/1/2019 20:22

grahamite2, see you're here too....in good company. Have been on board since Feb 16 and looking forward to the juicy special divi. GS projection encouraging.

[letsmakesome] 02/1/2019 23:36

Any idea why the share price is almost £2 off when you covert the Aus share price of c$34 back to GBP?

[grahamite2] 02/1/2019 16:03

Thanks chopsy.

[solomon] 02/1/2019 09:26

With the special divi (ex div 10th Jan) the yield is over 10% for this year.

[loganair] 02/1/2019 00:13

Last month in a note out of Goldman Sachs revealed that the broker has added BHP to its ANZ conviction buy list with a price target of $37.00.

Goldman's is positive on BHP due to its belief that the mining giant is only halfway through a multi-year re-rating. It expects returns to improve significantly due to its strategy of focusing on maximising cash flow through high-returning growth.

[loganair] 02/1/2019 00:03

BHP - Growth, long-term horizon, Deep Value an Australian Commodity Company with a Secure 5.5% Yield:

BHP is an enormous commodities company with an enormous portfolio of assets. The company's asset portfolio is spread across materials essential to modern society.

BHP has incredibly strong cash flow and has worked to maintain low debt levels and a respectable dividend yield throughout the downcycle.

BHP's cash flow potential going forward makes the company a great investment, one that I highly recommend.

BHP Group is an enormous commodity company with a market cap of more than $100 billion. The company operates in the copper, iron, coal, potash, oil, and gas industries. The company's operation in a variety of commodities means it is subject to cycles.

Through this article, we'll see that the company's focused improvements of its financial position combined with its impressive asset portfolio make it a company I recommend investing in at this time.

BHP Growing Asset Portfolio:

BHP has a growing asset portfolio that'll provide the company with more secure earnings going forward.

BHP's four segments have continued to reach record production, showing their incredible potential. The company has been focused on cutting cost as possible and has continued to earn incredibly strong EBITDA. The company's total EBITDA from its four assets is anticipated to reach $23.1 billion annually.

That's incredibly strong for a company with a market cap of more than $100 billion and shows the company's earning potential.

More so, the company's costs for all of its major earners are well below the current prices of the commodities. For example, the company's $10.06/barrel petroleum cost is less than 25% of the current crude oil prices. That shows the company's impressive cash flow potential from its assets and how profitable they are, even in a commodity downcycle.

BHP Capital Spending:

To grow its investment assets, the company plans to invest close to $10 billion annually. The company's impressive capital expenditure is well above its 2017 capital production and almost equivalent to the company's 2016 capital expenditure. That impressive capital expenditure is incredibly affordable and is equivalent to almost 10% of the company's market cap.

That means that these impressive investments should help the company's cash flow to grow.

BHP Project Cost Cutting:

Looking at the company's Australia operations, the company managed to have record production at 7 mines while decreasing costs by 2%. The company's Queensland costs are well below current coal prices, allowing the company to earn cash flow. However, the company does anticipate near term 2019 Queensland coal prices as higher, due to higher strip ratios.

The Olympic Dam mine, which focuses primarily on copper and uranium, has seen its ore increase. The company anticipates Olympic Dam production to increase going forward. The company's South Flank asset is also targeting first ore in 2021, which will help to increase the grade and lump proportion. These things should help the company's cash flow to increase.

BHP Major Project Delivery:

In the Americas, the company's Escondida mine, one of the largest copper mines in the world, has seen copper costs down 15% with record throughput. The company's volumes are expected to average 1.2 Mtpa to 2025, with unit costs at <$1.15 per pound. The company has maintained incredibly strong costs despite a decreasing grade.

Going forward, the company anticipates production to continue at the current levels, which should mean continued revenue and earnings. That's incredible production in spite of the fact that the grade of the ore has declined some. The company also has desalination water secured, which will help to maintain stability and support costs.

Overall, this asset will continue to provide billions of long-term cash flow BHP.

BHP Oil Portfolio:

The company's petroleum assets are another important aspect of its earnings. The company has 1 billion barrels in reserves replaced over the last decade, with finding & development costs well below its peers. The company's low finding and development costs of just over $20 will mean significant cash flow potential for the company.

The company's current investments are profitable at less than $50/barrel. The company's pipeline of 8 projects has achieved average returns of >25%, which is an amazing return for shareholders. The company has continued to increase performance and improving its exploration and success rates. Low cost of lifting, with impressive assets, means strong earnings going forward.

As we will see going forward, BHP's portfolio of assets and growth potential make it a strong investment.

BHP Financial Position:

BHP has an incredibly strong financial position, a financial position that it has been focused on improving. As a company at the bottom of a cyclical operation, in the immediate term, its finances are everything.

BHP Financial Portfolio:

BHP has an incredibly strong balance sheet that provides it with continued flexibility throughout the cycle. The company's balance sheet has been tested under a wide variety of price scenarios, and this shows that the company has a buffer for price movements. The company is targeting a net debt in the range of $10-15 billion.

During a downcycle, the company expects net debt increasing to the upper end of the region, before it drops back down. This shows the company's financial strength; the company is keeping its debt in a downcycle low. The company has strong liquidity, with an undrawn $6 billion revolving credit facility, which shows the company's financial ability.

BHP Shareholder Rewards:

Going forward, the company plans to reward shareholders while maintaining flexibility. The company has focused on a minimum 50% payout ratio dividend, while providing additional rewards to shareholders. That dividend is currently almost 6%, which shows the company's strength. The company has paid out $9 billion over the minimum dividend since early-2016.

The company was forced to cut its dividend in 2016 due to a tough commodity environment. The company's 50% payout ratio has been still below the progressive dividend, but the company's special dividend has grown to above the dividend while maintaining the company's strength.

BHP Debt Balances:

Looking at BHP's debt balances, the company has a very balanced debt maturity portfolio. The company has roughly $2 billion in annual debt due from now until 2026. Given the company's annual earnings of roughly $10 billion per year, that means that the company can comfortably afford the debt going forward.

This helps to show the company's incredibly impressive financial strength.

BHP Maximizing Returns:

Overall, these strong financials, combined with the company's new dividend policy, will allow the company to have strong shareholder returns. The company has reduced its debt by $15 billion in two years, reducing net debt to a $10-15 billion range. The company has a new minimum 50% payout ratio dividend we discussed above which'll reward shareholders well.

More so, the company plans to limit capital spending, with less than $8 billion in capital and exploration expenditure per annum until FY 2020. The company anticipates ROCE back to ~20% by FY 2022. That shows the company's improving financial profile, which will allow the company to continue to maximize in its investment while having strong returns.

BHP's Challenges:

Like all other major companies, BHP faces challenges. BHP's single greatest challenge is that the company is in a cyclical sector. Coal, copper, potash, and iron are all commodities that often deal with a cyclical pricing setup. As a result, the company's cash flow can vary heavily from year to year.

Despite investors knowing the business is cyclical, the company's stock price varies with these cycles too. That means that I don't recommend this stock for investors with 1,2, or even 5-year timelines. Rather I recommend it for investors who have closer to a 10-year timeline.

Still, in the event of a drawn-out commodity crisis, the company's stock price, cash flow, and even dividends could be punished heavily. As a result, as an investor, this is a risk you need to be open too. No one will know when the next commodity crash will happen, but there almost certainly will be one.

BHP Valuation:

Trying to put a direct price valuation on BHP is difficult, due to the fluctuation in commodity prices. However, I'll try and provide some guidance.

BHP's net operating cash flow, which the company uses to retire debt and pay its dividend, is the single most important metric I recommend paying attention too. In 2016, the company's net operating cash flow dropped to a mere $14.6 billion in the commodities crash. However, it has since rebounded. Still, these levels are 20% below 2014 when the crash started.

However, BHP dividend payment is paying similar to what it was before the crash. As the company's cash flow recovers, which I anticipate to be over the next few years, as commodity prices stabilize and costs are cut, its share price should recover further.

BHP is currently trading at 30% below its mid-2014 highs, while cash flow has dropped 14%. As a result, I think the company is roughly 16% undervalued at this time. As its cash flow increases, I expect the company's share price to increase in turn.

This also means as a catalyst for investors to pay attention to, pay attention to the company's cash flow as it reports it in 2019. Should the company miss cash flow numbers drastically, if it's commodity price related, that's a risk, but if it's due to poor management, I'd recommend selling your shares.

However, even right now, when you invest, you're getting a growing commodities company, with strong cash flow, and a dividend yield of more than 5%. That company is trading at 16% below what it should be based off of its cash flow.

Conclusion:

BHP has low cost assets, which means continued cash flow during the downcycle. As commodity prices recover, the company's stock price should return to mid-2014 highs, which will provide investors with strong returns. At the same time, the company's financials are set up for a market crash, and the company continues to pay investors a 5.5% dividend.

These things together make the company a rewarding and strong investment decision. I recommend investing in BHP at this time.

[whackford] 17/12/2018 07:12

In addition, the Board of BHP has determined to pay a special dividend (Special Dividend) of US$1.02 per share, which will be paid to all BHP shareholders with an entitled registered holding as of Friday 11 January 2019. The Special Dividend represents the residual US$5.2 billion of net proceeds from the sale of its Onshore US assets not returned via the Off-Market Buy-Back, based on the reduced number of shares on issue of approximately 5,058 million following completion of the Off-Market Buy-Back.

[whackford] 16/12/2018 15:42

I have it in my diary that the special divi will be announced tomorrow (17 Dec).

[solomon] 13/12/2018 10:44

Thanks loganair. Your timely quote from GS gave me the incentive to invest. Looking good so far. Possible breakout from 6 month downtrend.

[loganair] 10/12/2018 23:03

Goldman Sachs adds BHP Billiton shares to its conviction buy list:

All eyes will be on the BHP Billiton Limited (ASX: BHP) share price this morning after the mining giant was the subject of a broker note out of Goldman Sachs.

According to the note, the broker has added BHP to its ANZ conviction buy list with a price target of $37.00. This price target implies potential upside of around 17% for its shares over the next 12 months, excluding dividends.

Why is Goldman Sachs bullish on BHP?

Goldman believes that BHP is only halfway through a multi-year re-rating and it expects returns to improve significantly due to the mining giant’s strategy of focusing on maximising cash flow through high-returning growth.

It notes that BHP is generating US$11 billion to US$12 billion of free cash flow per annum and expects the majority of this to be returned to shareholders.

In addition to this, it likes BHP due to its favourable commodity mix, superior margins, non-core divestment potential, and oil exploration upside.

Another positive for the broker is its current valuation. It has pointed out that its shares are trading at 0.9x net present value of $35.40 per share and just 5.6x EV/NTM EBITDA. This compares to its 20-year average of 7x.

[argylerich] 30/11/2018 17:24

Nice job tidying up the header chopsy :-)

[bmnsa] 30/11/2018 15:02

Moving about a bit today.

[chopsy] 27/11/2018 22:15

Any more views?

[loganair] 27/11/2018 17:20

BHP are not a gold or silver miner therefore not needed and the price of the other commodities I only look at maybe once every couple of months.

[p0pper] 27/11/2018 17:07

It is always nice to have all the metals charts to look at though, saves going to different pages.

[loganair] 27/11/2018 17:04

I am surprised that BHP have fallen so much today considering the news of their world class copper find.




“Copper and oil are the main focus of BHP’s exploration programs in order to replenish our resource base and enhance our portfolio,” the company said in the statement.

[loganair] 27/11/2018 17:00

chopsy - BHP are not really a gold and silver miner or Aluminum. Personally I would just take the whole lot away except the top two charts as the NYSE, UKX, LSE already above are not really needed.

My best advise would be to keep any 'header' short and simple.

[chopsy] 27/11/2018 16:55

Loganair thanks for the feedback. In the absence of anyone stepping up to the plate and taking over, I will delete the red indian, but precisely which of the other charts do you not want? I thought the metals prices, annual and daily were a useful feature and it's nice to have UKX here. Anyone else like to chip in?

[essentialinvestor] 27/11/2018 15:51

Iron ore off approx 15% in the last week.