BHP Production Update

Submitted by Share Trading on 24 April, 2008 - 12:01

BHP Billiton has a production update commentary regarding petroleum, copper and iron ore from stockmarket analyst Macquarie Research Equities.

BHP: Production Statistics

Yesterday saw BHP Billiton Limited’s (BHP) share price trade above the $45 level for the first time this year, inline with record prices in resources. The 3rd Quarter production statistics released by BHP reiterate the theme of supply side constraints pushing up prices in resources. Over 80% of BHPs EBIT is driven by Petroleum, Base Metals and Carbon Steele businesses and in today’s note, Macquarie Research Equities (MRE) provide an insight into these main areas of production.

Petroleum (+8% QoQ, +10% YTD):

Volumes in petroleum have finally picked up in the all important high margin liquids projects at the Atlantis/Genghis Kahn and Stybarrow fields. There are still concerns that due to the delay in start up for Neptune the FY08 production figures will still end up at the lower end of guidence.

Copper (-6% QoQ, +8% YTD):

BHP Billiton has managed to deliver robust YTD production growth in copper, in thanks to the growth from the Spence and Pinto Valley. Volumes may have slipped in the last quarter as grades have declined at Escondida and production from Olympic Dam have been poor.

Iron Ore (+1% QoQ, +13% YTD):

On the back of the expansion at Pilbara, the results have been strong, delivering good volumes in a seasonally weak period. The FY08 guidance level 120 mega tonnes (mt) is well within reach with current year to date production figures of 100mt.

MRE commodity analysts believe that the current high prices in resources and commodities are sustainable over a longer period than normal as the demand from China is robust and outweigh any slowdown in demand from the U.S. BHP has proven to have the ability to continue to provide relatively strong production numbers even with the current supply constraints affecting the sector.