BHP Billiton Raises Oil Exploration Budget for 2016

Australian firm BHP Billiton has announced that it will put $2.7 billion towards petroleum capital expenditures this year – including $640 million for exploration, up from $567 million in FY2015. 

"As others cut back on exploration, our investment will go further and help create new options for the future," said CEO Andrew Mackenzie. 

The capex will be evenly split between offshore and onshore: $1.4 billion towards infill drilling in the Gulf of Mexico and life extension at its aging Bass Strait and North West Shelf developments offshore Australia, plus $1.3 billion towards its onshore acreage. 

The firm saw a decrease in total petroleum production of four percent for the nine months ending in March, led by a 12 percent drop in onshore American output. But it says that it is prepared to ramp up if business conditions improve. "While we are focused on value and cash flow preservation as we manage through this period of lower prices, we retain the option to develop our resources as prices recover to maximise the value of these quality assets," the firm said.  

In other updates, BHP said that it had submitted winning bids for four blocks in the March lease sale for the Gulf of Mexico, subject to regulatory approval; and that its Shenzi North-ST3 exploration well in the GoM had been completed. Hydrocarbons were found, and the well was plugged and abandoned.

Separately, oil major ExxonMobil announced Tuesday that it had started production at its Julia oil field in the Gulf of Mexico, under budget and ahead of schedule. The first production well is now online and a second well will start production in coming weeks. The drillship Maersk Viking is currently drilling a third well, which is expected to come online in early 2017; Exxon says that in all, it is on track to start up 10 new upstream projects in 2016 and 2017.