Elliott wants a review of BHP petroleum

Marco Green
May 29, 2017

"We are actively considering further divestments".

Activist hedge fund Elliott Advisors has called on BHP Billiton to conduct an independent review of its petroleum business, saying it has found broad support from other shareholders for unlocking its value.

Mackenzie will meet Elliott representatives on Wednesday, according to several media reports from a mining and metals conference in Barcelona that both parties are attending.

Mackenzie added that the petroleum exploration programme has an unrisked value of more than US$20bn and cited recent successes in the Gulf of Mexico, Trinidad and Tobago, that give BHP "the confidence to accelerate our counter-cyclical investment".

"Our roadmap today contains an enhanced set of opportunities that will see us prosper and grow value per share throughout the cycle, and in multiple price scenarios", he said.

BHP, which has halved its shale holdings since 2012, previously flagged its intention to sell parts of a Texas gas field and the possibility of exiting the Fayetteville shale gas assets in Arkansas.

BHP has invested too much - $8 billion alone on petroleum exploration since 2002 that the fund says has produced nearly no return.

Elliott had been pushing originally for BHP to collapse collapse its dual listings on the London and Australian sharemarkets, and move its domicile and primary listing to London, and spin out its North American oil and gas assets.

The miner started out life in 1885 as the Broken Hill Proprietary Company, or BHP, and retained that name until its 2001 merger with Anglo-Dutch mining company Billiton, said United Kingdom newspaper, the Guardian. Still, in the short term, a spinoff of the oil division delivers the most value, they said.

In the letter, the investor said it had held discussions with a number of shareholders who supported restructuring of the petroleum arm.

"We will be flexible with our plans and commercial in our approach", he said. Mackenzie is due to hold shareholder talks over the coming weeks. By 0730 GMT on Tuesday, BHP was down 0.2 percent.

Mackenzie outlined BHP's plans, which he argues could lift the value of the company by 50% and double its return on capital.

Mackenzie said offshore USA successes, as well as pioneering programs in South America, are driving growth for the company's petroleum portfolio. Its favoured option is a full or partial demerger.

Elliott Advisers on Tuesday called for an independent review of the mining giant's petroleum business and said it was now open to a unified company that would retain its full share market listing in Australia and London.

Other reports by Click Lancashire

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