BHP Petroleum Says Atlantis South Output Mid-2007

MELBOURNE Oct 19, 2006 (Dow Jones Newswires)

BHP Billiton (BHP) Thursday said the Atlantis South deepwater development in the Gulf of Mexico will be completed very late in the first half of calendar 2007.

BHP's new petroleum boss Mike Yeager said joint venture partner and project operator BP PLC (BP) expects oil production to start toward the end of the first half.

"We do expect to have that start up very, very, very late in the first half of 2007 and probably so late that it won't impact our fiscal year," he told analysts during a briefing from London. BHP's fiscal year ends June 30.

In his first lengthy briefing since taking the top job six months ago, the former ExxonMobil executive pegged out the Gulf of Mexico as the core of BHP's petroleum business.

Yeager said BHP's understanding of the geology of its patch of the deepwater Gulf puts it in a strong position to look at potential acquisitions in the area.

"When you look at what we can do there, and what we have done there, clearly we feel like if we want to step across the fence and try to do something that we have got some room to do it," he said.

Yeager said BHP is "looking at a few things" but plans to focus on its portfolio of development projects before chasing growth through acquisition.

"Over time we would like to see M&A be something that is a tool for us but right now our focus is on getting our platform and our foundation to where that is a credible discussion," he said.

Yeager nominated the Shenzi oil field in the Gulf of Mexico as a key project with a lot of potential upside.

There is scope for the facility to perform above its nameplate capacity of 100,000 barrels of oil per day in its first years, he said, and there are indications there may be more oil nearby.

"We have got some confidence that it could be oil-bearing in an area expanding beyond what our project will develop initially," he said.

At the Mad Dog development in the Gulf of Mexico, BHP now knew the field extends beyond the reach of its platform and BHP is looking at drilling the extensions with floating rigs tied back to the platform.

Yeager said the petroleum division's exploration spend in 2006/07 will be around US$450 million, and stay around this level in coming years.

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