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Tariq Siddiqui's picture
COO Upstream EP Advisors LLC

Oil & Energy | Business Development | Capital Projects | Offshore Wind -  Proven leader in offshore development and operations, with 25+ years’ expertise in managing business through cycles...

  • Member since 2021
  • 104 items added with 52,759 views
  • Jul 21, 2021 10:15 am GMT
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The world's biggest miner is reviewing its petroleum business and considering options including a trade sale, the report said, adding that the deliberations were still at an early stage and no final decision has been made.  Mining companies around the world are under growing shareholder and investor pressure to reduce their carbon footprint and take stringent climate actions to cut emissions, as calls for a shift towards cleaner forms of energy accelerate.

KEY INSIGHTS NOT COVERED IN THE ARTICLE

  • BHP has been in oil and gas since the 1960s, and has assets in the Gulf of Mexico and off the coast of Australia. It produced 102.8 million barrels of oil equivalent in the year ending June 30.
  • BHP doesn’t depend on profits from the energy business, which are dwarfed by the company’s giant iron ore and copper units.
  • BHP's oil and gas portfolio focused on the U.S. Gulf of Mexico, eastern Canada and Australia at $14.3 billion.

  • Rival Anglo American Plc has already exited thermal coal under investor pressure and BHP is trying to follow suit.

  • There is a serious stranded asset risk; BHP wants to avoid getting stuck with oil & gas assets that will become more difficult to sell.

  • BHP wants to exit while it can still get a good price for the assets, aiming to repeat a 2018 sale of its shale business to BP Plc for $10.4 billionunlike big-oil rivals 

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BOTTOMLINE

Getting out of both thermal coal and petroleum would help BHP make its case to investors as a company geared toward commodities of the future.With rising ESG pressures facing the industry, but also as this business potentially enters into a re-investment phase, one can see why management might be contemplating an exit.

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Matt Chester's picture
Matt Chester on Jul 21, 2021

Good example of putting your money where your mouth is and trying to be ahead of the curve-- companies that do this will win for it in the end as the markets shift

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