Drumbeat is growing exponentially for BPP to get out of petroleum

  • ESG pressure for BHP is released from fossil fuels
  • The best Australian properties in the hands of Woodside
  • High oil, gas prices create a favorable time for sales
  • BHP may want to take over the Gulf of Mexico assets

MELBOURNE, August 13 (Reuters) – BHP Group Limited (BHLL) is expected to make a decision on its oil future next week as pressure mounts to cut. His fossil fuel footprint.

The world’s largest mining company has been making detailed calls on how and when to extract fossil fuels, and activist investor market forces decided on the topic at its annual meetings in October and November this week. Read more

BHP’s decision to approve $ 802 million in development projects in the Gulf of Mexico – just days after a new report issued a major warning for climate change – has come under increasing pressure from some investors.

“Obviously something is booming,” said Simon Mavinni, Australia’s chief investment officer at Alan Gray.

BHP refrained from commenting on market estimates.

Analysts estimate that BPP’s oil business in Australia, the Gulf of Mexico, Trinidad, Tobago and Algeria is worth between $ 10 billion and $ 17 billion. The distribution contributed 5% of BHP’s gross domestic product to less than $ 14.7 billion in late December, compared to 70% of iron ore.

Investors are divided in the BHP portfolio, with the company focusing on new economic materials such as copper, nickel and potash.

Petroleum withdrawal will be a comprehensive strategy on BHP Environmental, Social and Governance (ESG) certifications and fossils.

Australia and the rest

BHP’s late life, primarily low-return energy assets, is ripe for sale in Australia amid high oil and gas prices.

“For BHP, if you look at Australian energy assets, if you can manage those prices in a meaningful way, that’s a good result,” said Pendal Group’s portfolio manager.

Credit Suisse and City value Australia’s energy assets – Bass Strait, Northwest shelf LNG and Scarborro Gas – from $ 3 billion to $ 5 billion.

Woodside Petroleum Limited (WPL.AX) is seen as a very reasonable buyer as they increase their cash flow and increase their shares in key projects, although not all investors support such a combination of asset mix and possibly demand. Promoting equity.

Woodside declined to comment.

Credit Suis analyst Saul Cavonic said BIP should reduce some of its hard-earned debts by any sale, although the sale could raise ESG levels and attract new shareholders.

“BHP may sell these at discounted prices, but it will re-evaluate the rest of their business and increase the stock price,” he said.

Elsewhere, investors say BPP’s assets are more attractive.

The most valuable is its stake in the Gulf of Mexico oil sector, valued at $ 10.4 billion by Wood Mackenzie, about 25% of the company’s 103 million barrels of oil production by June 2021.

“The rest of the portfolio, high growth, high return segments. They did a lot of work and the shareholders had to wear some bad times. They are good assets, ”said Pendall Group Saunders.

BHP will present its annual results at 0700 GMT on Tuesday.

Report by Melanie Burton and Sonali Paul; Edited by Richard ull Lin

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