The BHP Billiton production and exploration report for the first quarter of their financial year was out this morning

The BHP Billiton production and exploration report for the first quarter of their financial year was out this morning. The expectations were for lower petroleum production, as a ban on new drilling in the gulf of Mexico took effect, but this was not the case. As per the Production report: "Record quarterly Petroleum production despite the suspension of drilling activities in the Gulf of Mexico (USA). This was driven by strong crude performance at Pyrenees (Australia) and strong liquefied natural gas production at North West Shelf (Australia)."



Hurrah, diversity and a spread portfolio, inside of a portfolio saved the quarter! 43.09 million barrels equivalent produced for the quarter, annualise that and you get above 170 million barrels of oil per annum. To put that into perspective, Nigeria produces around 2.28 million barrels a day. So that is basically 74 and a half days worth of Nigerian production. In terms of consumption however, it is enough to supply the US for a little over 8 days. But enough for 336 days worth of South African consumption, we consume a little over half a million barrels a day.



That is the first surprise. Base metals. Copper production was better on account of the problems at Olympic dam being sorted, with the repair of the Clarke shaft. Thanks Clarke, say hi to Kent for me. And Daryl. As per the release "Escondida production is expected to decline by five to 10 per cent in the 2011 financial

year, mainly due to lower ore grades." A total of 291,200 tonnes of copper was produced for the quarter. Whoa!!



Iron Ore Another record quarter, six percent better than the same quarter this time last year and 2 percent better than the last quarter, Q4 to June 2010. Nearly 32 million tonnes. Remember that post the RPG 5 program, the group should be in a position to produce around 50 million tonnes per QUARTER!! To put that into perspective that is around 8 million tonnes more in a quarter than Kumba Iron ore produces in a year. And this is just a division. Am I getting the message across in terms of size and scale?



Why do we like this company as one of the cornerstones of our client portfolios? Well, diversity is one thing. And this counts geographically too. Quality of assets are another, BHP Billiton have always prided themselves on tier 1 quality, as they call it. You could argue that their gulf assets don't quite meet the grade at a global level, but they are not a pure out and out oil company. In fact the oil and crude production division is what makes them more attractive than their peers. Management are tops in our book too.




Australian miners threaten to walk away from tax talks is what the headline shot out at us. Hmmm... I think that I read it slightly wrong, check out the Sydney Morning Herald Gillard stands by mining tax deal. This is what happens when there is a Federal system. States doing what they can, opposing the Nation. Mining companies can't simply go and mine elsewhere. They have to be at the deposit. Not too sure what is going to transpire from this, I am staying tuned.