BHP may exit North West Shelf gas project
Summary: BHP could consider selling its stake in the North West Shelf liquefied natural gas project, with its 16.6 per cent stake capable of fetching $US5 billion ($6.6bn) for the mining giant.....
The North West Shelf, Australia’s original and largest LNG project, has long been a cash cow for BHP and its partners.
It generated $US814m in underlying EBIT for BHP last financial year, the equivalent of
7 per cent of the company’s total earnings.
But analysts at Macquarie have noted the project’s looming evolution into a toll treatment plant could prove the logical moment for BHP to exit the project.
Project operator Woodside is leading a push to bring in third-party gas supplies to keep the five LNG trains at full capacity. The big but remote Browse gas fields off northern WA appear to be the first in the queue for backfilling the North West project, although BHP passed judgment on Browse back in 2012 when it sold its stake in the project to PetroChina for $US1.63bn.
Macquarie noted that the change in approach towards toll treating meant the North West Shelf was unlikely to fit into BHP’s core strategy. The stake sits on BHP’s books with a value of $US1.6bn, but Macquarie believes the stake is actually worth about $US5bn if put on the market.
Such a move would represent a record-breaking divestment for BHP.
At the opposite end of the resources sector, the latest venture from veteran Peter Cook will make its debut on the ASX today. Nelson Resources will list after raising $5 million at 20c apiece after the IPO lead by Somers & Partners.
The company is chaired by Cook, who is best known for his roles with Westgold Resources and Metals X.