BHP Billiton Slashes Shale Drilling Amid Oil Crash
MELBOURNE, Jan 21 (Reuters) - BHP Billiton said on Wednesday it would cut its shale drilling spend over the next six months as it looks to meet its promise not to cut dividends in the face of a collapse in iron ore, copper and oil prices.
The world's biggest miner said it would pare the number of rigs it is using to 16 from 26 by June 2015 and would update the market on its revised shale drilling budget, originally set at $4 billion for this financial year, in February.
It plans to focus on drilling in the liquids-rich Black Hawk basin, while cutting back in the Permian and Hawkville acreage.
"However, we will keep this activity under review and make further changes if we believe deferring development will create more value than near-term production," Chief Executive Andrew Mackenzie said in a statement.
The Anglo Australian giant, which differentiates itself from its mining rivals by owning oil and gas assets, said so far it has spent $1.9 billion on onshore drilling out of the $4 billion originally slated for the current financial year.
BHP's strategy has been to expand in oil and gas, but it is now suffering not only from a slump in iron ore, copper and coal prices, but also a 60 percent plunge in oil prices in the past three months.
Mackenzie's grand plan to simplify BHP to focus on iron ore, copper, coal and petroleum while spinning off its aluminium, manganese, some nickel and coal assets into a new company, South32, will limit his ability to return capital to shareholders in the near term.
In contrast, arch rival Rio Tinto has repeatedly said it is on track to "materially increase" returns to shareholders starting in February, despite a 50 percent plunge in prices of iron ore, its main earner, over the past year.
(Reporting by Sonali Paul; Editing by Richard Pullin)
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