BHP Billiton chair: $20 billion investment in US shale a mistake

BHP Billiton

BHP Billiton invested $20 billion in the US shale play in 2011 and then spent billions more on operations.  Company photo.

BHP Billiton bought into US shale play at peak of fracking boom

In a Reuters report on Thursday, BHP Billiton’s Chairman Jac Nasser said, in hindsight, the energy giant’s $20 billion investment in the US shale industry was a mistake.

“If you had to turn the clock back, and if we knew what we knew today, we wouldn’t do it, of course we wouldn’t do it, but go back and put yourself in our position at that time,” Nasser said during a business seminar, referring to the shale purchase.

ride sharing“We bought exactly what we thought we were buying, but the timing was way off.”

In 2011 during the peak of the fracking boom, BHP entered the shale business and spent billions more developing the company’s operations.

The fall in oil prices has since led to pre-tax writedowns of about $13 billion on the business.

Elliott Management, an activist shareholder and hedge fund holding 4.1 per cent of BHP’s London-listed shares, has been trying to convince other shareholders to persuade the Australian-based firm to sell the US shale oil and gas business.

In April, Elliott released a list of changes it wants the company to implement and has since then been critical of the global firm.

According to Reuters, the list includes leaving shale, removal of BHP’s dual London and Australian stock listings and greater emphasis on shareholder returns.

Nassar did not comment on the proposal, but he did defend BHP’s performance, saying the company’s shareholder returns were up 486 per cent since BHP merged with Billiton Plc in 2001.

In May, BHP Chief Executive Andrew Mackenzie told a conference that the company did consider divesting some shale acreage, but it believed the assets were “well-placed for the future.”

Jac Nasser, a former head of Ford Motor Co. is scheduled to retire as chairman on Sept. 1 and will be replaced by Ken MacKenzie, a former packaging industry executive.

Elliott describes the hire of MacKenzie as a “constructive step in bringing much needed change to the direction of BHP.”

Ted Morton

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