SYDNEY (AFP) -The world’s biggest miner BHP Billiton Wednesday said it was cutting back its operating US shale oil rigs by 40 per cent amid slumping prices, but expected production output to rise for the financial year.
BHP said it would reduce the number of rigs from 26 to 16 by the end of the June in response to weaker oil prices. Shale volumes were still forecast to grow by approximately 50 per cent during the period.
“In petroleum, we have moved quickly in response to lower prices and will reduce the number of rigs we operate in our onshore US business by approximately 40 per cent by the end of this financial year,” chief executive Andrew Mackenzie said.
“The revised drilling programme will benefit from significant improvements in drilling and completions efficiency.”
Mackenzie said while the firm’s drilling operations would focus on its Black Hawk field in Texas, “we will keep this activity under review and make further changes if we believe deferring development will create more value than near-term production”. Shares in BHP closed up 2.07 per cent to Aus$28.05 Wednesday.
Oil prices slid again Tuesday after the International Monetary Fund slashed its forecast for world economic growth and revived concerns about the strength of crude demand.
US benchmark West Texas Intermediate for February sank $2.30, or 4.7 per cent, to US$46.39 a barrel, not far from its lowest level since March 2009.
“The announcement that BHP will reduce the number of US onshore oil rigs it operates by the end of this financial year is a pointer to the industry-wide supply response on lower oil prices that is yet to come,” CMC Markets’ chief market analyst Ric Spooner said in a note.
BHP added that its iron ore output had risen by 16 per cent for the three months to December compared to a year earlier, hitting 56.4 million tonnes.