BHP Billiton production report for the full year

I couldn't sleep last night. No, not true, I slept well, it is a by product of boarding school, being able to sleep anywhere and at the drop of a hat. The reason why I wouldn't have slept, if I had sleeping problems, would have been that BHP Billiton released their full year production report this morning.


Annual records were set across seven operations and in five commodities. The Western Australia Force might be an average team, but BHP Billiton's Iron Ore outfit is powerful. The last quarter produced an annualised rate of 217 million tonnes, the actual output across their iron ore division was 17 percent higher than the year before at a whisker under 170 million tonnes.


47.6 million tonnes produced for the quarter. Just a little bit of perspective, when Kumba Iron Ore reported their quarterly production back in April, they had managed to produce 10.3 million tonnes. This one division of BHP Billiton, primarily located in Western Australia (there is also a JV with Vale in Brazil that produces around 12-15 percent of their total iron ore production.) Most of the iron ore is shipped out from the Pilbara to Port Headland, a port that has more than doubled their capacity in the last 6 odd years.


The petroleum division which produced nearly 236 million barrels of oil equivalent, which was probably the only major miss in the numbers as a whole, in terms of guidance given in the past. I can promise you that we lose very little sleep over a 1.5 percent miss in terms of guidance versus actual. Still, a six percent increase is more than acceptable. Eagle Ford is now their biggest producing field, having brought online more than 100 wells during the last quarter. Expect big things from these assets, even though of course the timing was not altogether "right".


Copper production was higher by 10 percent, thanks to better grades at their flagship mine, Escondida. I am not too sure about you, but I would not really want to live up there in the Atacama Desert, the temperature plummets at night, and is sky high during the day. And it never rains. A study suggested that some river beds have been dry for 120 thousand years. Mars is wetter. More iron ore on Mars. Good performance from the base metals division, the lead division aside, which was like a lead balloon, down 11 percent. I have never quite understood that saying, like a lead balloon. You can't fill a lead sphere with helium and expect it to float. Coal, both Metallurgical coal with an increase of 13 percent and energy coal (lower grade) of 3 percent registered decent enough gains.


There you go. A few surprises, mostly with the iron ore division, and that is good, because the margins are great there. The stock is up in London and Johannesburg and was up *nicely* in Sydney. This is pretty pleasing, bearing in mind that some of the negatively perceived Chinese growth numbers. I mean, if you didn't believe the Chinese numbers, then companies like BHP Billiton would respond to the demand side by cutting back on production of base metals and ferrous metals, energy and metallurgical coal. Wouldn't they? They would cease their 18 major brownfield projects that are coming online by the end of 2015. Five of those are petroleum, five are iron ore projects and four are metallurgical coal projects. I am guessing that they still see major steel demand. Next stop, results shortly, 20 August. Just over a month.