Two bits of news yesterday have revealed that the resource investment boom, which definitely punctured, hasn’t died.
BHP Billiton said yesterday it plans to boost its exploration budget by 29% to about $US900 million ($1.2 billion) in 2016-17, as the global miner rediscovers a taste for new discoveries and the extension of existing operations.
And Woodside Petroleum revealed that it and its partners (Mitsui E&P Australia) had given the greenlight for the $2.75 billion Greater Enfield oil and gas project.
The project, about 60 kilometres off Exmouth in WA, will develop the Laverda Canyon, Norton over Laverda and Cimatti oil fields with first oil expected in mid-2019. There are an estimated 69 million barrels of oil in the areas to be targeted.
Woodside said the project would be produced via a 31 kilometre subsea tie-back to the Ngujima-Yin floating production storage and offloading facility at the Vincent oil field.
Woodside will operate the project through its 60% stake, with Mitsui retaining a 40% stake, making Woodside’s total investment $1.5 billion.
BHP meanwhile is looking mainly for more copper and oil and the management sees exploration as a cost-effective way of expanding existing projects or finding new deposits compared with mergers and acquisition activity, even at current low prices for miners and energy groups (and low commodity prices).
The $US900 million figure is nearly 20% of BHP’s planned 2016-17 capital budget and it was only in December that BHP had projected total 2016-17 exploration spending of $US700 million, so the planned increase is a significant lift.
BHP will focus its oil and gas exploration in the deepwater basins in the Gulf of Mexico, the Caribbean and the Northern Beagle basin off the coast of Western Australia (where BHP has existing assets).
Copper exploration is targeting deposits in Chile, Peru, the US, Canada and South Australia, where the company also has deposits.
BHP shares jumped more than 3% yesterday to $18.08, while Woodside shares eased up half a per cent to $25.90
