Dec. 5, 2014, 5:38 PM
- The Eagle Ford shale formation in south Texas produced its billionth barrel of oil some time last month, according to analysts at research firm Wood Mackenzie.
- Eagle Ford now accounts for 16% of total U.S. oil production, and the firm forecasts E&P spending of $30.8B in the region next year, ~22% of the total $139.3B expected in U.S. onshore spending.
- Eagle Ford is widely considered the most profitable U.S. shale field, and many analysts speculate the break-even price for production to remain profitable is ~$50/bbl in much of the play.
- Top Eagle Ford producers include EOG, CHK, COP, MRO, BHP, APC, APA, BP, COG, CRZO, CWEI, CRK, XOM, GDP, HES, MTDR, MUR, NFX, PVA, PXD, ROSE, RDS.A, RDS.B, SN, SM, STO, SFY, TLM, ZAZA
Dec. 4, 2014, 2:16 PM
- BHP Billiton (BHP -0.6%) is reiterated with a Market Perform rating but a reduced target price of ~$63 vs. $73 earlier at Bernstein, which calls the mining giant a “colossus with feet of clay."
- Despite BHP's impressive portfolio of high quality assets, "this is not enough [for] a premium rating to a company that must place a premium rating on [its] products... something that BHP appears to be unwilling to do, preferring a strategy of volume over price.
- Bernstein also does not believe BHP can afford to increase its dividend except through an increase in gearing, which makes it different from Australian peer Rio Tinto (RIO -2.7%) - neverthless, RIO is downgraded to Underperform from Buy at BofA Merrill Lynch on lower iron ore prices.
- Vale (VALE -1.5%) also sees its stock price target lowered, to $10 from $12 at RBC, amid the subdued outlook for iron ore and near-term funding challenges.
Dec. 1, 2014, 11:38 AM
- BHP Billiton (BHP -1.5%) iron ore president Jimmy Wilson said this weekend that plunging iron ore prices had been anticipated given their forecasts that supply growth would exceed the growth in demand, and signals there will be no slowdown in the drive to boost production by global iron ore producers.
- “Even the iron ore price where it is today can induce more volume,” Wilson told Australia’s Nine Network, and "if that volume doesn’t come from our business, it’s going to come from other businesses around the world and other countries around the world.”
- Bernstein analyst Paul Gait recently said: "If BHP do not value the products that they mine but are quite happy to dump them on the market whatever the price, then it is hard to see why anyone should value the company associated with such activity."
- Also: RIO -0.2%, VALE -3.4%, CLF -7.6%.
Nov. 25, 2014, 8:58 AM
- Iron ore trades below $70 for the first time in five years, as rising low-cost supplies by the world’s top miners widen a global glut amid slowing demand from China.
- Ore with 62% content delivered to Qingdao fell 1.2% to $69.58/dry metric ton, the lowest since June 2009, and has dropped 48% YTD.
- “The biggest problem is on the supply side as majors like BHP and Rio are pushing huge volumes into the lackluster demand environment," says Bernstein's Paul Gait, who adds that $65 "feels like a floor."
- BHP -1.8%, VALE -0.6%, RIO -0.4% premarket.
Nov. 24, 2014, 5:59 PM
- The flooding of Uralkali's Russian potash mine is confirmation for BHP Billiton (NYSE:BHP) CEO Andrew Mackenzie of the wisdom of his company’s planned move into the industry.
- No major new mines have begun production since the 1970s, and the halt of operations at the Solikamsk-2 mine - which accounts for 3% of the world's total supply - is a sign of the vulnerability of supply as the need to feed a growing global population spurs demand, the CEO says.
- BHP hopes to build its Jansen project in Saskatchewan sometime in the next decade, though Mackenzie is cautious about giving an exact timeline.
Nov. 24, 2014, 2:58 PM
- BHP Billiton's (BHP -2.2%) commitment to target $4B/year in cost cuts and other productivity gains in its core portfolio is a clarion call to the big mining contractors that times are about to get tougher.
- Despite the spending cuts and productivity gains, analysts think it will not be enough to deliver a round of share buybacks or special dividends in February.
- "If you look at the iron ore price, no one would reasonably be expecting any of the majors would be in a strong position to return capital above the base dividends. In this market people are questioning the ability to in some cases even pay that base dividend," says CLSA's David Radclyffe.
- Iron ore prices currently are ~$70/metric ton, while prices hit a high of $180 less than three years ago; coal, oil and other commodities are also taking a bath, crunching the profit margins of the miners.
Nov. 24, 2014, 7:53 AM| Comment!
Nov. 23, 2014, 4:26 PM
Nov. 20, 2014, 10:40 AM
- BHP Billiton (BHP -1.5%) CEO Andrew Mackenzie seeks to reassure investors of the company's commitment to boosting cash returns as commodity prices slide, while saying a buyback of shares is not the top priority right now.
- Mackenzie says his key focus is to keep the company’s balance sheet strong - which includes maintaining what he says is a solid A credit rating - followed by a strong dividend, "then we selectively invest in what we have for growth, and only then if we can see excess cash might we consider [a buyback]."
- UBS said recently that it did not expect any such buyback until at least the middle of next year given the steep drop in iron ore prices, and Jefferies has said BHP is likely to underwhelm from a capital returns perspective unless commodity prices rebound more than expected.
Nov. 19, 2014, 12:26 PM
- Iron ore prices extend their historic decline, approaching $70/dry ton in a retreat to the lowest level in more than five years, as analysts rule out any Chinese restocking that typically supports prices towards the end of each year.
- The price is now at a level at which all but the three biggest low-cost producers - Rio Tinto (RIO -2.4%), BHP Billiton (BHP -3%) and Fortescue (OTCPK:FSUMF -8.8%) - are either generating losses or are struggling to break even.
- Steel stocks also are getting whacked: SCHN -5.4%, X -4%, PKX -3%, AKS -3%, CMC -2.7%, STLD -2.5%, NUE -1.6%, MT -1.3%.
Nov. 18, 2014, 12:49 PM
- Iron ore extends its tumble deeper into five-year lows as declining home prices in China add to worries that an economic slowdown in iron ore's biggest buyer will deepen and exacerbate an oversupply.
- Ore with 62% content delivered to Qingdao, China, has retreated 47% YTD to $71.80 a dry ton, and Citigroup thinks prices may drop to less than $60/ton next year as output rises further and demand remains weak; China’s bad loans climbed in Q3 by the most since 2005, while new-home prices declined, adding to speculation the cooling economy will weaken further.
- VALE -2.9%, RIO -1.9%, BHP -1.1%, CLF -6%, X -1.4%, AKS -1.9%.
Nov. 18, 2014, 7:49 AM
- Tugboat engineers at Australia’s Port Hedland have voted down a proposed agreement on wages and leave, extending the threat of disruptions to iron ore shipments at the world’s largest bulk export terminal.
- The rejection renews the risk of delaying exports by companies including BHP Billiton (NYSE:BHP) and Fortescue Metals (OTCPK:FSUMF).
- Iron ore is Australia’s biggest commodity export earner and disruptions could cost suppliers A$100M/day, BHP has said, and shipments through Port Hedland represented ~55% of the country’s iron ore exports last year.
Nov. 14, 2014, 4:56 PM
- New developments and the expansion of older oil fields are expected to lift deepwater Gulf of Mexico production 18% Y/Y to 1.9M boe/day in 2016, the first new production peak seen since 2009, according to Wood Mackenzie’s latest outlook.
- However, production is expected to plateau for the remainder of the decade following the 2016 peak due to the depletion of legacy fields and a limited number of new projects coming onstream.
- Among top Gulf producers: RDS.A, RDS.B, BP, CVX, BHP, APC, APA, HES, E, EXXI.
Nov. 11, 2014, 5:47 PM
- BHP Billiton (NYSE:BHP) abandons the sale of its Nickel West mining operation in Western Australia, saying it had not been able to find a buyer willing to pay an acceptable price for the asset.
- BHP had been reviewing its options for the Nickel West business, which includes the Mount Keith, Cliffs and Leinster mines and associated concentrators, the Kalgoorlie smelter, Kambalda concentrator and Kwinana refinery.
Nov. 10, 2014, 8:56 AM
- Rio Tinto (NYSE:RIO) CEO Sam Walsh tells Reuters he is unfazed by plunging ore prices, believing his company's industry-low production costs of $20.40/metric ton in H1 2014 will help it ride out the storm.
- Walsh also says he is confident of increasing returns to shareholders at full-year results in February, adding that RIO has no plans to cut its 2015 capital spending target of $8B, announced last year.
- RIO is on track to increase output 9% to 290M metric tons ahead of a push to 360M metric tons, ranking it second in size behind VALE and far ahead of third-place BHP.
Nov. 10, 2014, 7:58 AM
- Tugboat masters and deckhands at Australia’s Port Hedland have voted to accept a new labor agreement.
- While engineers still plan a four-hour work stoppage on Nov. 12, the agreements lessen the risk of disruption to iron ore supplies from BHP Billiton (NYSE:BHP) and Fortescue Metals (OTCPK:FSUMF).
- Iron ore is Australia’s biggest export earner, and shipments through Port Hedland represented 55% of the country’s iron ore exports last year; more than 80% of the cargoes go to China.
BHP vs. ETF Alternatives
BHP Billiton Ltd is a natural resources company. The Company is engaged in the producing commodities, including iron ore, metallurgical and energy coal, conventional and unconventional oil and gas, copper, aluminium, manganese, uranium, nickel and silver.
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