BHP could offload $5 billion in petroleum operations

After meeting with sell-side analysts in London, BHP Billiton’s (ASX: BHP) chief executive Andrew Mackenzie has suggested that the company is looking to simplify its oil and gas portfolio, and could offload up to US$5 billion worth of its interests in the sector.

Shareholders have been applying significant pressure to resources companies, including BHP, Rio Tinto (ASX: RIO) and Fortescue (ASX: FMG) to drastically reduce their costs and, in turn, increase shareholder returns.

Such a move to divest from a number of petroleum operations would allow the miner to do just that, whilst also giving it scope to improve productivity amongst its other core operations, including iron ore, copper and coal.

Whilst NSW coal and Cerrejon have been highlighted as the ‘core’ energy coal assets, there are also a number that may not be considered core, but which could attract bids worth up to US$5 billion combined.

Foolish takeaway

Although there have certainly been positive signs for resources companies recently, with commodity prices remaining resilient, there are still enormous risks facing the sector. As such, investors may be better off looking elsewhere for investment ideas.

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

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