BHP Billiton quarterly production report. Iron Ore, petroleum looking good.

Let us jump into the commodities pool now and have a look at the BHP Billiton production report. If you want to download the report, and I suggest as a shareholder that you do just that, do so here -> BHP BILLITON PRODUCTION REPORT FOR THE QUARTER ENDED 30 SEPTEMBER 2011. Sorry about the capitals, I know it is shouting, but that is from their report, not me shouting. I do that with a !

First up, iron ore production, (annualised) clocked a record high. Their petroleum business is firing on all cylinders with the new acquisition, as they say: "Petroleum production increased 19% in the period, reflecting the successful acquisition of the Fayetteville and Petrohawk Onshore US shale businesses on top of strong operating performance from existing assets." If you forgot about those recent acquisitions then read our pieces that we wrote at the time -> BHP buy Petrohawk from the middle of July and BHP Billiton acquires Chesapeake Energy shale gas assets, that was towards the back end of February. The back end? Sounds like a sport term, I think it is. The back end of an innings is when you see Rusty and Wayne......(you know the rest).

If the company kept up this quarterly pace, the annual number for petroleum production will clock over 200 million barrels of oil equivalent for the first time. To put that number into perspective, it is basically enough to supply the world from Monday in the wee hours of the morning, all the way through to Wednesday afternoon. This is enough oil equivalent to provide the US with enough from that same time Monday to when the sun is setting next Thursday. And China for nearly 23 days, so that kind of puts it into context, where BHP Billiton are in terms of their oil production. South Africa roughly uses 580 thousand barrels of oil a day, so BHP could supply us for nearly a whole year, 355 days. Now there is size and scale for you!!

The aluminium division production was flat. Did you notice that Rio was looking to sell some of their aluminium assets? See here -> Rio Tinto retreats from aluminium, $8 bln of assets on block. Some suggested that it was "kicking the Alcan down the road". Ha-ha! Copper production was way lower, this as a result of "Lower ore grades and industrial action at Escondida (Chile), planned maintenance activity at Pampa
Norte (Chile) and planned smelter and refinery outages at Olympic Dam (Australia) (which) all impacted copper production in the period. Record material mined and milling rates were, however, achieved at Antamina and coincided with operations progressing through a copper rich ore zone." Copper production was 19 percent lower when compared to last quarter and 24 percent lower than last year. Yowsers!

And then the big one, Iron Ore - "Western Australia Iron Ore (WAIO) shipments rose to a record annualised rate of 173 million tonnes per annum in the quarter (100% basis). WAIO continued to benefit from the dual tracking of the company's rail infrastructure, increasing overall system capability."

Met coal increased when measured against last quarter, up 17 percent was lower by 10 percent when measured against last the last end to September period. Energy coal increased single digits when compared to both last quarter (1%) and the corresponding quarter last year (8%). In closing the highlights were natural gas and iron ore production and the lowlights were base metals and met coal. As ever, the litmus test is how Mr. Market is responding? BHP Billiton ended flat on the day in Sydney. I see.

This other release at the same time sometimes makes for more interesting read, because the production report is the past, this is the future: BHP BILLITON EXPLORATION AND DEVELOPMENT REPORT FOR THE QUARTER ENDED 30 SEPTEMBER 2011. First off, it is clear to see that the iron ore ramp up is soaking up a lot of the funds allocated to the group expansion. That, and obviously the natural gas acquisitions have been much of the focus. For next year, petroleum exploration expenditure (excluding Onshore US exploration) will be 1 billion Dollars. Big number, bearing in mind that drilling hit rate does not always reveal the desired effect, but that is the nature of the business.

This gives you a good idea of what is going on in terms of mineral exploration, the future post the gas and iron ore ramp ups (which are here): "Greenfield exploration continued on copper targets in South America, Mongolia and Zambia; nickel and copper targets in Australia; and diamond targets in Canada. Exploration for iron ore, potash and uranium was undertaken in a number of regions including Australia, Africa and the Americas." Still keen on most of their core businesses, which is pleasing to see.