Australian-based conglomerate BHP Billiton announced Wednesday that the mining, metals and petroleum company is expecting to cut U.S. shale operation by 40 percent in the upcoming months.
In a press release, BHP announced that it will move forward on the plan to reduce their rig count by ten from 26 to 16 by the end of June. However, even with current iron ore, copper and oil market prices unfavorable, BHP Billiton has assured shareholders that it will not reduce dividends. Additionally, BHP is still expecting to increase shale liquids volumes by 50 percent over this period of rig reduction and general cutbacks.
BHP Billiton Chief Executive Officer Andrew Mackenzie exclaimed that performance over the past six months was strong. “We are reducing costs and improving both operating and capital productivity across the Group faster than originally planned,” Mackenzie stated in his comments.
However, luckily for those employed in South Texas, BHP is taking this opportunity to focus on their liquid-rich Black Hawk acreage in the Eagle Ford Shale Play. Mackenzie stated that BHP will keep the South Texas activity under review and make further changes if the company believes deferring development will create more value than short-term production. “The revised drilling program will benefit from significant improvements in drilling and completions efficiency,” Mackenzie noted.
For other oil and gas operations, such as those in the Haynesville shale, production cuts are in place. The Company’s dry gas development program will be reduced to one operated rig in the Haynesville. The majority of the revised drilling program will limit attention to the retention of core acreage in Western Texas (Permian Shale Play) and again, the Eagle Ford Region. Read the full press release here.