The BHP Group Ltd (ASX: BHP) share price has continued its positive run and hit a multi-year high of $36.68 on Thursday.
This latest gain means the mining giant's shares have rallied an incredible 22% since this time last year.
That return does not include the dividends the company has paid over the period. If you factor both its ordinary and special dividends in, then the total return stretches to a massive 32%.
Why is the BHP share price on fire?
Investors have been fighting to get hold of BHP's shares due to a number of factors including favourable commodity prices, its impressive operational performance, the offloading of non-core assets, and the high levels of free cash flow that its world class operations have been generating.
Its shares were also given a small boost today when the company announced that its board has approved US$696 million in funding to develop the Atlantis Phase 3 project 208 kilometres off the coast of Louisiana in the US Gulf of Mexico.
According to the release, Atlantis Phase 3 is a subsea tie back of eight new production wells that will be drilled and completed to access infill resource opportunities. First production is expected in the 2020 calendar year and is estimated to increase production by ~38,000 barrels of oil equivalent per day at its peak.
BHP holds a 44% interest in the Atlantis field, with BP holding the remaining 56% interest.
In addition to this, the BHP board approved US$256 million in funding to drill an additional appraisal well (3DEL) and perform further studies in the Trion field in Mexico to further delineate the scale and characterisation of the resource.
The release explains that the primary objectives of the 3DEL and studies are to confirm the volume and composition of hydrocarbons near the crest of the Trion structure, and study the viability of development of the Trion field. BHP holds a 60% interest in the Trion.
Is it too late to invest?
While I think that BHP's shares are approaching fair value now after its stunning run, I still see value in them for longer term investors and income seekers. Especially if commodity prices remain favourable in 2019 and 2020.
Overall, I would still class it as a buy with Rio Tinto Limited (ASX: RIO) and South32 Ltd (ASX: S32).
