BHP: US$200m NWS Angel development approved

Submitted by Share Trading on 19 December, 2005 - 19:12

[BHP] UBS: – A$21.60 Buy 2 Target: A$27.00 - BHP approves its share of NWS Angel development: BHP Billiton today approved its share of the North West Shelf Venture’s Angel development. BHP will contribute US$200m (16.67% share) towards the gas and condensate field off the north west coast of Australia. The development is required to provide additional gas supply for LNG Train 5 (under construction) and meet future WA domestic gas demand.

Impact: Angel already in our forecasts

Angel will produce up to 800 mmcfd of gas and 50,000 bpd of condensate (gross). Production is expected to commence in Q4 08 with full production reached in Q1 09. The project is expected to have plateau production for 4-5 years with a life of 8-10 years. We have already included this project in our estimates and make no further changes to our forecasts at this stage.

Action: Continue to monitor mining capital costs

Capex estimate for this development was US$150m back at the time of the FY 05 profit result. Half of the US$50m increase relates to refining of estimates associated with the final stages of feasibility. A further US$25m relates to cost inflation, a common theme across the mining sector. Going forward continuing high oil and gas prices will be required to ensure further project development.