BHP Tipped To Cut US Shale Spend To Shore Up Dividend Promise


MELBOURNE, Jan 19 (Reuters) - BHP Billiton Ltd may be forced to slash its planned $4 billion spending this year on U.S. shale wells and book writedowns on its shale assets as it battles plunging prices for its biggest earners iron ore, oil and copper.

The mining giant, which has cut capital spending for the past two years, needs further savings to have enough cash to meet a promise not to reduce its dividend, analysts and investors said, with some tipping it could slice its U.S. onshore drilling budget in half.

The spending cuts could come as soon as Wednesday, when BHP will release its December quarter operational review.

U.S. onshore drilling, the biggest single item in the company's capital budget, is seen as the easiest target after a 41 percent plunge oil prices, 16 percent drop in iron ore prices and 12 percent drop in copper prices over the past three months.

Other candidates for cuts in its $14.2 billion capital and exploration spending plan could be its longer-dated projects like BHP's Canadian Jansen potash project and Australian Olympic Dam copper expansion study.

"When you are pushed up against the wall you have to make some difficult decisions, so all those things are possibilities. Commodity prices are falling very quickly, very sharply," said Richard Knights, an analyst at London-based investment bank Liberum.

Shale drilling is much easier to shut than conventional oil and gas wells as individual wells are smaller, making it a logical target for cuts. It is not expected to cut spending on its conventional wells in the Gulf of Mexico.


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