BHP to separate shale from conventional oil and gas business

Changes are being made under Andrew Mackenzie’s productivity agenda.

Under the productivity agenda being undertaken by BHP Billiton (ASX: BHP), which was set in place by CEO Andrew Mackenzie, the miner is set to separate its capital-intensive US shale business from its conventional oil and gas interests.

Tim Cutt, BHP’s new petroleum boss, stated that, “When we think about developing shale, it’s really much more like a manufacturing process than typical oil and gas development. So we’re putting a consolidated business around our shale assets.”

Whilst the company will focus heavily on the development of the shale business as it works towards the productivity initiative, Cutt has reassured the public that BHP is still “very interested (in conventional) offshore” oil and gas. Although the costs in this area are significantly higher, the returns can also be very significant and BHP has plenty of experience in achieving results.

As quoted by The Australian, Cutt said “we do plan to leverage that expertise moving forward, so we’re not just shifting to shale. We’re separating the two businesses, and we’re making sure we’re focused on both.”

Nevertheless, Cutt confirmed that shale would be the division’s growth engine “for the foreseeable future”.

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Motley Fool contributor Ryan Newman does not own shares in any of the companies mentioned in this article.

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