BHP Operational Review for the Year Ended 30 June 2018

  •  Met or exceeded full year production guidance for petroleum, copper, iron ore and energy coal. Met revised guidance for metallurgical coal.

  • Group copper equivalent production increased by 8% in the 2018 financial year, with annual production records at Western Australia Iron Ore (WAIO), Queensland Coal and Spence.

  • We expect to achieve full year unit cost guidance at our major assets (based on 2018 financial year guidance exchange rates of AUD/USD 0.75 and USD/CLP 663).

  • Group copper equivalent production for the 2019 financial year is expected to be broadly in line with the 2018 financial year(1).

  • The exit process for Onshore US is progressing to plan. Bids have been received and we aim to announce one or more transactions within the coming months, targeting completion of any transactions by the end of the 2018 calendar year.

  • In Petroleum, the Victoria-1 exploration well in Trinidad and Tobago encountered gas and the Samurai-2 well in the US Gulf of Mexico encountered hydrocarbons in multiple horizons.

  • The South Flank sustaining iron ore project was approved during the June 2018 quarter.

  • We expect the financial results for the second half of the 2018 financial year to reflect certain items as summarised in the table on page two.

BHP Chief Executive Officer, Andrew Mackenzie, said: “We have delivered a strong finish to the 2018 financial year with an eight per cent increase in annual production and record output at Western Australia Iron Ore, Queensland Coal and at our Spence copper mine in Chile. We further simplified the portfolio with the announced divestment of Cerro Colorado in Chile and Gregory Crinum in Australia and our investment in South Flank supports our ability to supply low cost, high quality products into Asia.

Good prices and our culture of continuous improvement give us positive momentum into the 2019 financial year.”


Total petroleum production for the 2018 financial year decreased by eight per cent to 192 MMboe.

In our Conventional business, volumes are expected to decrease to between 113 and 118 MMboe in the 2019 financial year as a result of additional downtime from planned dry dock maintenance at Pyrenees and natural field decline across the portfolio. Given our intention to exit Onshore US, no annual guidance for the 2019 financial year for these assets will be provided, however until completion, which we are targeting by the end of the 2018 calendar year, we expect a production run rate broadly consistent with the second half of the 2018 financial year.

In the June 2018 quarter, BHP agreed to sell its 90 per cent interest in the Minerva Gas Plant in Victoria to the Casino Henry Joint Venture. The agreement provides for the transfer of the plant and associated land after the cessation of current operations processing gas from the offshore Minerva gas field, and remains conditional on completion of regulatory approvals and assignments.

Petroleum capital expenditure for the 2018 financial year increased by five per cent to US$1.6 billion.

Onshore US development activity

Onshore US drilling and development expenditure for 2018 financial year was US$0.9 billion. Our operated rig count declined from seven to five during the June 2018 quarter.

The exit process for our Onshore US assets is progressing to plan. Bids have been received and we aim to announce one or more transactions within the coming months, targeting completion of any transactions by the end of the 2018 calendar year.

Petroleum exploration

In the US Gulf of Mexico, we increased our equity interest in the Murphy operated Samurai prospect (GC432 and GC476), the northern extension of the Wildling sub-basin, from 33.33 to 50 per cent. The Samurai-2 exploration well was spud on 16 April 2018 and encountered hydrocarbons in multiple horizons not previously observed by the Wildling-2 exploration well. As reported in the March 2018 Operational Review, we were the apparent high bidder on three blocks, EB914 and EB699 in the western Gulf of Mexico and GC823 to the west of the Mad Dog field, which we co-own with BP and Chevron. All three leases were awarded by the Regulator during the June 2018 quarter.

In Trinidad and Tobago, following the gas discovery at LeClerc, we commenced Phase 2 of our deepwater exploration drilling campaign to further assess the commercial potential of the Magellan play. The Victoria-1 exploration well was spud on 12 June 2018 and encountered gas. Following completion of the Victoria-1 well, we expect the Deepwater Invictus to drill the Bongos prospect in Northern Trinidad and Tobago.

In Mexico, we expect to begin drilling the first appraisal well at Trion in the December 2018 quarter.

In Australia, the fast track of the Exmouth sub-basin 3D seismic data has been received. The final processed data will be delivered during the September 2018 quarter.

Petroleum exploration expenditure for the 2018 financial year was US$709 million, of which US$516 million was expensed.

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