* BHP zeroes in on Eagle Ford, Permian oil for growth
* U.S. shale oil to help in diversification from metals
* Iron ore still No. 1 for world's biggest miner, output
nears 200m/t a year
By James Regan
SYDNEY, April 17 BHP Billiton's focus
on U.S. onshore oil drilling is starting to pay off with a 15
percent rise in liquids production in the latest quarter, as the
miner drills new wells in its giant shale holdings in Texas.
Faced with a fall in U.S. natural gas prices, BHP
said in its quarterly production report it will spend 80 percent
of its $4 billion U.S. onshore development budget on the Eagle
Ford and Permian shale assets, its biggest liquids-producing
The rise in liquids output to 5 million barrels helped
offset a downturn in its offshore units, keeping the petroleum
division on track to meet its fiscal 2013 production forecast,
as BHP seeks to reduce its reliance on mining metals.
"There's no doubt that the onshore fields have done their
production numbers no harm," said David Lennox, a mining analyst
for Fat Prophets.
The global miner stuck to its full-year production guidance
for its major businesses in the March report, with top earner
iron ore posting a 6 percent rise in output to 40.2 million
tonnes despite the effects of bad weather.
BHP, the world's No. 3 iron ore miner behind Vale
and Rio Tinto , said production rates were
nearing 200 million tonnes a year, and maintained its guidance
in for fiscal 2013 output of 183 million tonnes.
Floods around Australia's collieries took their toll on
BHP's output of coking coal and thermal coal, with the company
reporting its lowest thermal coal production in five quarters.
Coal prices have dropped sharply this year and the outlook
for thermal coal is souring as more power suppliers switch to
gas. Rio Tinto has already trimmed its Australian thermal coal
production guidance for 2013 by 500,000 tonnes.
Production of copper concentrate at the world's biggest
copper mine, the BHP majority-owned Escondida mine in Chile,
rose by 61 percent in the nine months to March 31 and was on
track to increase by at least 20 percent in 2012/13, BHP said.
The rise should also benefit Rio Tinto, which holds a 30
percent interest in Escondida. Rio Tinto is facing a
100,000-tonne shortfall in refined copper production this year
due to a cave in at its U.S. Kennecott mine last
Eagle Ford and the Permian Basin in Texas have stood out
among BHP's move into onshore U.S. drilling with a $12 billion
acquisition in 2011.
The two escaped the $1.48 billion impairment taken on the
Fayetteville gas asset in August 2012 because they produce oil
as well as gas, meaning they were less affected by last year's
slump in the gas price.
BHP, the world's biggest diversified miner by revenue, is
moving ahead with a strategy of relying more on petroleum to
offset cyclical price weakness in iron ore and other metals.
Iron ore's contribution to revenue fell to 29 percent in the
half-year ended December from 31 percent in the prior six
months, and analysts expect iron ore prices to fall as demand
from China cools.
Petroleum accounted for 21 percent of BHP's revenues in the
latest half-year versus 18 percent in the prior period.
BHP is calling on U.S. lawmakers to relax export
restrictions on oil and gas. If that occurs it may be encouraged
to further accelerate U.S. output.