Analyzing Why BHP Billiton's American Depositary Receipts Trade At Different Prices
Caiman Valores • 25 Comments
Caiman Valores • 25 Comments
Aug. 28, 2015, 8:22 AM
- Exxon Mobil (NYSE:XOM) and BHP Billiton (NYSE:BHP) say they plan to spend A$400M ($287M) to replace a pipeline that transports crude oil and condensate between two of their sites in Australia's Victoria state.
- The two companies, through their 50-50 joint venture in the Gippsland Basin, will replace a 116-mile pipeline, with construction expected to begin later this year, pending regulatory approval.
Aug. 26, 2015, 9:57 AM
- BHP Billiton (BHP +2.1%) is upgraded to Sector Perform from Underperform with a A$27 price target, up from A$25, at RBC, which says lower costs leave the world's largest miner well positioned to withstand weak commodity prices.
- RBC analyst Timothy Huff says BHP has shifted its focus from growth capex to paying dividends, which "is not only a strong commitment to cover the dividend, but also shows a new flexibility with which management now views growth capex.”
- Huff believes BHP is a “high single-digit free cash flow-yielding stock” that does not fully reflect the potential cost gains from capex, working cap and iron ore in the next two years.
Aug. 25, 2015, 7:40 AM
- BHP Billiton (NYSE:BHP) +7.4% premarket after reporting its weakest annual earnings since 2003 and cutting its long-term forecast for Chinese steel demand, but reiterating its pledge to fully maintains its dividend.
- BHP, the last of the big five global miners to report results, said its underlying attributable profit fell to $6.42B for the year to June, below analyst consensus of $7.73B and $13.26B a year earlier; net profit plunged 86%, with BHP taking $2.9B in post-tax charges, mainly on its U.S. shale and Nickel West businesses.
- BHP forecasts crude steel production in China to fall to 935M-985M metric tons in the mid 2020’s, after saying in May it expected China’s steel output to reach as much as 1.1B tons by the middle of the next decade, but it expects China’s broader economy to lift in the second half of this year, meeting its 7% growth target for 2015.
- The miner raises its full-year dividend to $1.24/share from $1.21, and reiterates its policy of maintaining or increasing its dividend, which costs at least $US6.5B/year; BHP has not cut its dividend since 1988, and did not rebase its dividend when it spun out South32 earlier this year.
- To help protect its dividend, BHP says it is cutting capital spending for the 2016 for the third time since February, to $8B.
Aug. 25, 2015, 4:18 AM
- Mining giant BHP Billiton (NYSE:BHP) posted its worst underlying profit in 10 years amid a commodities slide directly tied to Chinese market turbulence.
- Underlying profit for the full year of $6.4B was down 52% from the prior year and missed an expected $7.73B. Net profit was $1.91B.
- BHP is lowering its forecasts for peak steel demand from China, but said "Our margins at 50% remain unquestionably the best in the sector," and pointed to strong operating cash flow protecting the balance sheet.
- The company is boosting its dividend by 2.5%, to $1.24/share.
- "Our forecast for Chinese steel production is to peak in the mid 2020s at between 935 and 985 million tonnes per annum," said CEO Andrew MacKenzie.
- Shares are up 5.5% in a quite green London stock market. In U.S. trading, the company's ADRs are up 5.7% premarket. They're down 32% YTD.
Aug. 14, 2015, 8:18 AM
- BHP Billiton (NYSE:BHP) says normal iron ore shipments have been restored at the Chinese port of Tianjin after deadly blasts caused disruptions, while Fortescue Metals (OTCPK:FSUMF) says deliveries were unaffected.
- BHP’s cargoes were disrupted yesterday after the explosions forced authorities to restrict vessels calling at the facility, while Rio Tinto (NYSE:RIO) says four fully laden bulk carriers were re-routed; Fortescue says its shipments were being delivered and handled as normal.
- Iron ore on the Dalian Commodity Exchange jumped 2.7% yesterday to the highest in more than a month on news of the disruptions, but prices have slipped today.
Aug. 13, 2015, 8:25 AM
- Iron ore shipments to China have been disrupted after yesterday's deadly explosions at Tianjin’s port - the world's 10th largest - caused authorities to restrict vessels calling at the facility.
- Mills in China are the world’s largest buyers of iron ore and the blasts, which have killed at least 44 people, will prompt shippers, traders and users to tap stockpiles and seek alternative routes.
- BHP Billiton (NYSE:BHP) says its iron ore operations at the port have been disrupted but that there was no damage to iron ore discharging berths; BHP does not own or operate any iron ore berths at Tianjin, but the port does receive its shipments along with those of other iron ore miners.
- Fortescue Metals (OTCPK:FSUMF) also says its iron ore operations at the port have been affected, while Rio Tinto (NYSE:RIO) has not provided details of any potential damage.
- Also, Chevron (NYSE:CVX) says it suspended operations at a nearby lubricants facility but that the plant did not sustain immediate visible damage.
- Iron ore futures in China jumped nearly 4% to their highest in more than five weeks.
- Tianjin handled 25M tons of iron ore imports in H1 of this year, or 5.5% of China’s total, and shipped out ~30% of the country’s steel exports in the period.
Aug. 11, 2015, 11:35 AM
- Commodity metals are getting hammered by China's devaluation, with aluminum trading down nearly 2%, copper prices lower by 2.5% and nickel plunging more than 3.5%.
- Hardest hit of the mining stocks is Freeport McMoRan (FCX -14.1%), which has completely surrendered yesterday's 10.8% surge; shares now are down 72% over the past year and 57% YTD.
- Iron ore miners are sharply lower: BHP -5.5%, RIO -4.2%, VALE -7.8%, CLF -7.3%.
- Steel companies: X -9.7%, MT -5.1%, AKS -5.7%, NUE -2.9%, STLD -3.5%, CMC -4%.
- Also: AA -6%, CENX -4.9%, TCK -8.2%, SCCO -4.9%.
- ETFs: XLB, JJC, XME, SLX, PEO, VAW, COPX, DBB, UYM, CU, IYM, JJN, SMN, JJU, PICK, MATL, CPER, JJT, BOM, RJZ, FXZ, PYZ, BOS, FOIL, JJM, LD, BDD
Aug. 10, 2015, 9:16 AM
- BHP Billiton (NYSE:BHP) says it plans to cut 380 jobs at its Olympic Dam copper and uranium mine in Australia, citing global market conditions in the resources sector and a desire to ensure the project was sustainable.
- The latest round of job losses follow earlier announced cuts of 140 mainly administrative positions, and eventually will bring Olympic Dam's workforce to ~3,500, down from an earlier figure of ~4,000.
- A local economist warns that South Australia's unemployment rate could reach 9% in the next six months amid hard times in the minerals and energy sector.
Jul. 29, 2015, 12:25 PM
- Cliffs Natural Resources (CLF -0.8%) shares have fluctuated above and below the flatline even after reporting a bigger than expected Q2 loss, driven by lower U.S. iron ore pricing and shipments.
- CLF says it expects to see improved industry operating conditions and profitability in H2, but it nevertheless cuts its 2015 sales volume forecast for U.S. iron ore operations by 1.5M tons to 19M tons of iron ore pellets, blaming a supply glut created by heavy steel imports.
- Ben Levisohn of Barron's speculates CLF shares may be helped today by investors betting that steel prices will head higher after steel producers filed a trade case, or it could be a short squeeze as short-interest remains high despite being well off its peaks.
- Other iron ore producers are higher: BHP +1.5%, RIO +1.2%, VALE +3.1%.
Jul. 23, 2015, 12:20 PM
- While Vale presses ahead with output expansion, Australia’s Fortescue Metals (OTCPK:FSUMF -4.7%) says it is capping iron ore shipments, becoming the first of the top exporters to quit the race to funnel fresh supplies into the oversupplied market.
- The miner says iron ore shipments totaled 165.4M metric tons in the fiscal year through June, up 33% Y/Y and at the top end of its earlier projection of 160M-165M tons.
- Fortescue says it expects to cut costs a further US$1.4B in the fiscal year through June 2016, almost matching the US$1.6B of savings recorded over the prior two years, which CFO Stephen Pearce says “means we will produce the same amount of tons as we did last year, and we will spend US$1.4B less in doing so.”
- Nevertheless, iron ore producers are broadly lower again amid slumping commodity prices: VALE -1.7%, BHP -2.4%, RIO -1.4%.
Jul. 22, 2015, 10:22 AM
- Citigroup analysts say BHP Billiton's (BHP -3.4%) FY 2016 guidance for declines in production of oil, coking coal and copper were larger than expected, and the guidance for increased iron ore production was also below expectations.
- While declines were expected due to field decline in oil and lower grades in copper, "it highlights the capital intensive nature of mining and that even $9B of capex does not drive production growth every year," CIti says, as it forecasts copper equivalent production growth of 2% in FY 2017.
- "The beauty of diversification is that when one commodity is down, one of the others picks up the slack. That's not happening right now for BHP," says a mining analyst for Morgans Financial.
- Miners and related companies are hammered in early trading: CLF -13%, RIO -1.9%, VALE -2.5%, FCX -3.1%, OTCPK:AAUKY -3.9%, CAT -2.7%, JOY -1.2%.
Jul. 21, 2015, 8:55 PM
- BHP Billiton (NYSE:BHP) says it beat its fiscal year iron ore guidance, shipping a record 254M metric tons for the year to June, up 4% Y/Y, but took an impairment charge of between US$350M-$650M, mostly from weakness in its copper business.
- BHP says it is on track with its rapid iron ore expansion to 270M metric tons of iron ore in the current year, and up to 290M in FY 2017.
- Production of other commodities during last fiscal year was mixed: Output of metallurgical coal rose 13% Y/Y at a record 43M tons, while production of copper and thermal coal fell.
- BHP reports a 4% rise in full-year petroleum production to a record 256M boe, but says it expects output in the coming year to fall 7% as it defers development of some gas fields.
- In addition to the US$350M-$650 writeoff, BHP previously announced expectations of a ~US$2B post-tax charge against its onshore U.S. assets.
Jul. 20, 2015, 9:51 AM
- BHP Billiton (BHP -1.1%) coal operations president Mike Henry tells The Australian he expects no recovery in coking coal prices any time soon, and that more mines will need to close to balance the market.
- Uncertainty over how China is implementing new regulations to test for fluorine in coal has further dented demand, Henry says, as "one problem is that they [China] don't use the same testing standards we use, and the results on the Chinese side can be quite different from the results here - that creates uncertainty."
- Henry nevertheless says he plans to increase production from BHP's Queensland coal mines.
Jul. 15, 2015, 12:44 PM
- BHP Billiton's (BHP -1.3%) expected US$2B after-tax writedown of its U.S. onshore petroleum business, as development of a major gas field in Texas proves more complex and costly than anticipated, means the company will have written down its oil and gas business by more than $4B since 2011.
- CEO Andrew Mackenzie has designated oil and gas as one of the “four pillars” of BHP’s business, alongside iron ore, copper and coal, but the latest writedown - which comes as prices for three other three commodities trade near six-year lows amid a global supply glut - "poses the question of whether or not those four pillars are the right ones,” says IG Ltd. strategist Evan Lucas.
- Some are asking why BHP is not writing off more, with the company yet to take any big price-related writedown on U.S. shale; "given the deteriorating conditions of the U.S. oil and gas market, we thought an impending impairment could have been larger,” J.P. Morgan's Lyndon Fagan says.
- The news could have been worse: Alongside the writedown, BHP raised its longer-term Permian production guidance to 150K boe/day from 100K boe/day, it confirmed FY 2016 capex guidance of US$1.5B, and said it expects to be free cash flow positive in the U.S. onshore business at US$60/bbl WTI and US$3/MMbtu gas.
Jul. 15, 2015, 3:36 AM
- BHP Billiton (NYSE:BHP) is once again feeling the sting from its investments in U.S. shale gas and oil, the latest in a series of hiccups since it boosted its exposure to energy assets in 2011.
- BHP said today it would take a $2.8B writedown (most of it on the Hawkville field in Texas), bringing its pretax charges on its U.S. shale unit to about $5.9B over the past three years.
Jul. 14, 2015, 10:31 AM
- Vale (VALE -3.5%) gives back part of yesterday's big gains sparked by news that it would withdraw 25M metric tons of annual production starting this month.
- Vale’s "cut" was not really a cut, as it is merely adjusting its operations to shift production from higher-cost tons to more profitable output; it maintained its 2015 production guidance at 340M tons as well as its longer-term target of producing 450M tons by 2018.
- Morgan Stanley says Vale's move will not reduce supply and will not lead to higher iron ore prices in the short term, and could even have the opposite effect.
- Citigroup says any move would need to result in reduced supply to have a prolonged influence on physical markets and prices, adding that BHP Billiton (BHP -1%) and Rio Tinto (RIO -0.8%) are unlikely to follow Vale’s move.
BHP Billiton Ltd. engages in the exploration, development, production and processing of minerals, gas and oil. It operates through the following segments: Petroleum and Potash, Copper, Iron Ore, and Coal. The Petroleum and Potash segment explores, develops and produces oil and gas; plus the... More
Sector: Basic Materials
Industry: Industrial Metals & Minerals
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