Shares in BHP Billiton (LON:BLT) have jumped more than two percent in London this morning as the Anglo-Australian miner unveiled plans to exit its US shale business, bowing to pressure from activist investor Elliott Management. The blue-chip company further revealed that it had returned to full-year profit, as it cut costs and benefitted from stronger commodity prices.
As of 08:34 BST, BHP Billiton’s share price had added 2.60 percent to 1,401.50p, outperforming the broader UK market, with the benchmark FTSE 100 index currently standing 0.64 percent higher at 7,365.61 points. The group’s shares have added just under 36 percent to their value over the past year, and are up by some seven percent in the year-to-date.
BHP Billiton announced in a statement this morning that it had made attributable profit of $5.89 billion (£4.58 billion) in the financial year ended June 30, as compared with a $6.24-billion (£4.85 billion) loss a year ago. The group’s net operating cash flow meanwhile came in 58 percent higher at $16.8 billion, and the miner hiked its payout to shareholders by 177 percent to $0.83 per share.
The Anglo-Australian group also said in its results statement that it had deemed its US Onshore assets non-core, and was “actively pursuing options to exit these assets for value”. The group’s plans to offload the assets follows calls from hedge fund Elliot Management for the company to demerge its US petroleum business.
“We’re talking to many parties and we’re hopeful” of completing a small number of trade sales to divest the onshore oil and gas division, BHP’s Chief Executive Officer Andrew Mackenzie told Bloomberg Television this morning, adding, however, that the move was not the result of shareholder pressure.
Paul Gait, analyst at Bernstein, meanwhile backed BHP’s plans to exit its US shale assets.
“[We] welcome this as a step in the right direction given our belief that oil is not a natural fit for the BHP portfolio,” he told The Telegraph.