Release Time

IMMEDIATE

Date

19 October 2021

Release Number

23/21

BHP OPERATIONAL REVIEW

FOR THE QUARTER ENDED 30 SEPTEMBER 2021

Note: All guidance is subject to further potential impacts from COVID-19 during the 2022 financial year.

  • We safely delivered reliable operational performance during the quarter as we executed a series ofplanned major maintenance activities across our assets.
  • All production and unit cost guidance(1) remains unchanged for the 2022 financial year.
  • Our major projects under development are tracking to plan, with two new projects, the Jansen Stage 1potash project and the Shenzi North development project in the US Gulf of Mexico, approved during the September 2021 quarter. The Jansen shaft project is 96% complete, and the Trion oil project in Mexico moved into the Front End Engineering Design (FEED) phase and is expected to progress to a Final Investment Decision from mid-calendaryear 2022.
  • The announced agreement to pursue a proposed merger of our Petroleum business with Woodside tocreate a global top 10 independent energy company is progressing to plan, with full form transaction documents expected in November 2021.
  • We announced our intention to unify our corporate structure under BHP's existing Australian parentcompany subject to final Board and other approvals. Unification would create a simplified structure and enhance strategic flexibility. If approved, unification is expected to occur in March 2022 quarter.
  • In Petroleum, the Calypso appraisal well Bongos-3 in Trinidad and Tobago spud on 27 July 2021 andencountered hydrocarbons. A side track is currently being drilled to complete the appraisal.
  • In Copper exploration, BHP exercised its option to form an exploration joint venture with Red Tiger
    Resources for the Intercept Hill copper project, which borders BHP's Oak Dam site in South Australia.

Production

Sep Q21

Sep Q21

Sep Q21 vs Jun Q21 commentary

(vs Sep Q20)

(vs Jun Q21)

Petroleum (MMboe)

27.5

27.5

Higher volumes due to increased production from Ruby and higher seasonal gas

3%

2%

demand at Bass Strait, partially offset by lower production at North West Shelf and

natural field decline.

Copper (kt)

376.5

376.5

Lower volumes at Olympic Dam due to the commencement of the planned smelter

(9%)

(7%)

maintenance campaign, albeit approximately one month delayed due to COVID-19

related border restrictions.

Iron ore (Mt)

63.3

63.3

Lower volumes reflects planned major maintenance including car dumper one and the

(4%)

(3%)

impacts of temporary rail labour shortages due to COVID-19 related border

restrictions, which have improved during September 2021.

Metallurgical coal (Mt)

8.9

8.9

Lower volumes due to planned maintenance at BMA, a planned longwall move at

(9%)

(25%)

Broadmeadow and mining in higher strip ratio areas at BMC. This was partially offset

by record stripping at BMC reflecting a step up in underlying truck productivity at

South Walker Creek.

Energy coal (Mt)

4.2

4.2

Lower volumes at NSWEC due to mining in higher strip ratio areas, partially offset

17%

(6%)

by increased stripping enabled by continued improvement in underlying truck

productivity.

Nickel (kt)

17.8

17.8

Lower volumes due to planned maintenance across the supply chain.

(20%)

(21%)

Group copper equivalent production decreased by 5% in the September 2021 quarter following lower minerals volumes largely a result of planned maintenance.

BHP Operational Review for the quarter ended 30 September 2021

1

Summary

BHP Chief Executive Officer, Mike Henry:

"BHP's operations delivered reliably during the first quarter and we completed planned major maintenance activities across a number of our assets. We continue to skilfully navigate the ongoing challenges of COVID-19.

We progressed the ramp-up of production of high quality iron ore at South Flank and copper from the Spence Growth Option, and we delivered first nickel sulphate from our new plant at Kwinana.

We sanctioned the Jansen Stage 1 potash project in Canada, and made a series of targeted investments in copper and nickel exploration in Australia and Canada. These are aligned with our efforts to increase our exposure to future facing commodities and to position the portfolio to continue to deliver attractive returns and long-term value to shareholders."

Operational performance

Production and guidance are summarised below.

Note: All guidance is subject to further potential impacts from COVID-19 during the 2022 financial year.

Sep Q21

Sep Q21

Current

Sep

vs

vs

FY22

Production

Q21

Sep Q20

Jun Q21

guidance

Petroleum (MMboe)

27.5

3%

2%

99

- 106

Unchanged

Copper (kt)

376.5

(9%)

(7%)

1,590 - 1,760

Escondida (kt)

243.7

(14%)

(1%)

1,000 - 1,080

Unchanged

Pampa Norte (kt)

67.5

59%

(3%)

330

- 370

Unchanged

Olympic Dam (kt)

29.5

(43%)

(42%)

140

- 170

Unchanged

Antamina (kt)

35.8

3%

(1%)

120

- 140

Unchanged

Iron ore (Mt)

63.3

(4%)

(3%)

249

- 259

WAIO (Mt)

62.3

(6%)

(3%)

246

- 255

Unchanged

WAIO (100% basis) (Mt)

70.6

(5%)

(3%)

278

- 288

Unchanged

Samarco (Mt)

1.0

100%

2%

3 - 4

Unchanged

Metallurgical coal (Mt)

8.9

(9%)

(25%)

39 - 44

Queensland Coal (100% basis) (Mt)

15.6

(9%)

(26%)

70 - 78

Unchanged

Energy coal (Mt)(i)

4.2

17%

(6%)

13 - 15

NSWEC (Mt)

4.2

17%

(6%)

13 - 15

Unchanged

Nickel (kt)

17.8

(20%)

(21%)

85 - 95

Unchanged

Assets held for sale

Energy coal - Cerrejón (Mt)(i)

2.1

98%

15%

n/a

  1. Cerrejón production guidance has ceased reflecting the announced divestment of our interest in June 2021 and volumes will be reported separately from 1 July 2021 until transaction completion.

Major development projects

During the September 2021 quarter, the BHP Board approved an investment of US$5.7 billion (C$7.5 billion) for the Jansen Stage 1 project in Canada and US$544 million for the Shenzi North development project in the US Gulf of Mexico.

At the end of the September 2021 quarter, BHP had four major projects under development, in petroleum (Mad Dog Phase 2 and Shenzi North development) and potash (Jansen mine shafts and Jansen Stage 1), with a combined budget of US$11.2 billion over the life of the projects.

BHP Operational Review for the quarter ended 30 September 2021

2

Corporate update

In August 2021, we announced a merger proposal to combine our Petroleum business with Woodside Petroleum Ltd by an all-stock merger, subject to confirmatory due diligence, negotiation and execution of full form transaction documents and satisfaction of conditions precedent including required approvals. The proposed merger would create a global top 10 independent energy company by production and be the largest energy company on the Australian Stock Exchange. Execution of a Share Sale Agreement and Integration and Transition Services Agreement is expected to take place in November 2021. Following receipt of all approvals, the merger is expected to be completed in the second quarter of the 2022 calendar year with an effective date of 1 July 2021. An integration team with representatives from both companies has been established and is progressing integration planning activities, which includes developing a path to unlock estimated synergies of more than US$400 million per annum.

In August 2021, we also announced that we intend to unify our dual listed company (DLC) structure, subject to final Board approval, third party consents, regulatory, shareholder and court approvals. Unification would result in a corporate structure that is simpler, more efficient and improves portfolio flexibility to maximise value for shareholders over the long-term, including facilitating a simpler separation of Petroleum. Constructive engagement with regulators and third parties continues and the process remains on track. If all approvals are received, unification is expected to occur in the March 2022 quarter.

On 14 September 2021, BHP released its Climate Transition Action Plan 2021 (CTAP). The CTAP builds on the Climate Change Report we released in September last year and has been designed with reference to the structure of the Climate Action 100+ Net Zero Company Benchmark, which was established in late 2020. It provides an update on BHP's performance in a format that responds to evolving investor assessment and disclosure frameworks, announces our enhanced position on Scope 3, and continues BHP's demonstrated and long-term commitment to engagement and transparency on our approach to climate change.

In October 2021, we entered into renewable energy supply agreements that will see Olympic Dam reduce its operational emissions to zero for 50 per cent of its electricity consumption by 2025, based on current forecast demand. Iberdrola Renewable Energy Park near Port Augusta in South Australia will supply the renewable energy under the agreement and, once in operation in July 2022, will be Australia's largest solar-wind hybrid plant. This announcement follows BHP's entry into renewable energy agreements for BHP's operations in Western Australia, Queensland and Chile.

In October 2021, we also signed a Memorandum of Understanding (MoU) with South Korea's POSCO, one of the world's largest steelmakers to jointly explore greenhouse gas emissions reduction technologies in the integrated steelmaking value chain.

Our Support Agreement with Noront Resources (Noront) to make an all-cash takeover offer for Noront remains in place. Noront owns an extensive land package that includes the Eagle's Nest nickel and copper deposit in the James Bay Lowlands, Ontario, in an emerging metals area known as the Ring of Fire.

Samarco's Judicial Reorganisation process is continuing in the Commercial Courts of Belo Horizonte, State of Minas Gerais. The Judicial Reorganisation is a means for Samarco to restructure its financial debts in order to establish a sustainable independent financial position as Samarco continues to rebuild its operations safely and meet its Renova Foundation obligations.

In addition, negotiations are ongoing with State and Federal Prosecutors and certain other Brazilian public authorities in relation to the review of the Framework Agreement. The Framework Agreement was entered into between Samarco, Vale and BHP Brasil and the relevant Brazilian authorities in March 2016 and established Foundation Renova to develop and implement environmental and socio-economic programs to remediate and provide compensation for damage caused by the Samarco dam failure. The suspended R$155 billion (approximately US$30 billion) Federal Public Prosecution Office claim is under discussion as part of these negotiations, which were provided for in the Governance Agreement signed between the parties in 2018.

BHP Operational Review for the quarter ended 30 September 2021

3

Petroleum

Production

Sep Q21

Sep Q21

vs

vs

Sep Q21

Sep Q20

Jun Q21

Crude oil, condensate and natural gas liquids (MMboe)

12.8

11%

4%

Natural gas (bcf)

88.4

(3%)

0%

Total petroleum production (MMboe)

27.5

3%

2%

Petroleum - Total petroleum production increased by three per cent to 28 MMboe. Guidance for the 2022 financial year remains unchanged at between 99 and 106 MMboe.

Crude oil, condensate and natural gas liquids production increased by eleven per cent to 13 MMboe, reflecting lower impact from weather events in the Gulf of Mexico, increased volumes from Ruby following first production in May 2021 and the additional 28 percent working interest acquired in Shenzi in November 2020, partially offset by natural field decline across the portfolio.

Natural gas production decreased by three per cent to 88 bcf, reflecting decreased production at North West Shelf and natural field decline across the portfolio, partially offset by increased volumes from Ruby and higher seasonal demand for gas at Bass Strait.

Projects

Project and

Capital

Initial

Capacity

Progress

ownership

expenditure

production

US$M

target date

Mad Dog Phase 2

2,154

Mid-CY22

New floating production facility with the

On schedule and budget.

(US Gulf of Mexico)

capacity to produce up to 140,000 gross

The overall project is 95% complete.

23.9% (non-operator)

barrels of oil equivalent per day.

Shenzi North

392

CY24

A two-well subsea tie-in to the Shenzi

Approved in August 2021.

development

platform, with the capacity to produce up to

(US Gulf of Mexico)

30,000 gross barrels of oil equivalent per

72% (operator)

day.

On 5 August 2021, we announced an investment of US$544 million for Shenzi North development in the US Gulf of Mexico. The capital expenditure represents a 100 per cent share interest. BHP is the operator and holds a 72 per cent share in Shenzi North. Repsol holds the remaining 28 per cent working interest. First production is targeted for the 2024 calendar year.

We also announced the approval of US$258 million in capital expenditure to move the Trion oil project in Mexico into the Front End Engineering Design (FEED) phase. The focus of these studies will be on completion of the engineering, commercial arrangements and execution planning required to progress to a Final Investment Decision (FID) from mid-calendar year 2022.

In the September 2021 quarter, onshore construction and commissioning of the Mad Dog Phase 2 project's semi- submersible floating production platform, Argos, was completed and it is in the process of being towed to the final location for offshore execution. First production from Mad Dog Phase 2 is expected in the middle of the 2022 calendar year.

In October 2021, one of the two Shenzi infill wells was brought online and early flowback results looks promising. Both Shenzi infill wells are expected to be online in the 2022 financial year.

Engineering work continues to progress at Scarborough. BHP and Woodside (the operator) have developed a plan towards Scarborough FID by the end of the 2021 calendar year prior to the proposed completion date for the merger. As part of this plan, BHP and Woodside have agreed an option for BHP to divest its 26.5 per cent interest in the Scarborough Joint Venture (JV) to Woodside and 50 per cent interest in the Thebe and Jupiter JVs to Woodside if the Scarborough JV takes a FID by 15 December 2021 and the merger does not proceed.

BHP Operational Review for the quarter ended 30 September 2021

4

Petroleum exploration

Exploration and appraisal wells drilled during the September 2021 quarter are summarised below.

Well

Location

Target

Formation age

BHP equity

Spud date

Water

Total well

Status

depth

depth

Bongos-3

Trinidad & Tobago

Lowest

Late Miocene

70% (BHP

27 July 2021

2,114 m

5,360 m

Hydrocarbons

Block TTDAA 14

hydrocarbons

Operator)

encountered

Bongos-3X

Trinidad & Tobago

Gas

Late Miocene

70% (BHP

27 July 2021

2,114 m

4,197 m(i)

Drilling ahead(i)

Block TTDAA 14

Operator)

Bongos-4

Trinidad & Tobago

Gas

Late Miocene

70% (BHP

6 August 2021

2,177 m

3,368 m

Suspended(ii)

Block TTDAA 14

Operator)

  1. Well depth and status as at 30 September 2021.
  1. Bongos-4will resume at completion of Bongos-3X.

In Trinidad and Tobago, the Calypso appraisal program is currently underway. The Bongos-3 well was spud on 27 July 2021 and the formation evaluation program was completed on 18 September 2021. The well encountered hydrocarbons and a side track (Bongos-3X) is currently being drilled for further appraisal. The Bongos-4 well was spud on 6 August 2021 and is currently suspended, with operations due to recommence following the completion of Bongos-3X operations.

In the central Gulf of Mexico, the Wasabi exploration well (GC124-001) was spud on 7 October 2021.

In Barbados, the government has approved our proposed seismic program and we plan to acquire a 3D seismic survey over a portion of the Bimshire and Carlisle Bay blocks. The survey is expected to commence in the December 2021 quarter.

Petroleum exploration expenditure for the September 2021 quarter was US$87 million, of which US$35 million was expensed. An approximate US$540 million exploration and appraisal program is being executed for the 2022 financial year.

BHP Operational Review for the quarter ended 30 September 2021

5

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BHP Group plc published this content on 18 October 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 18 October 2021 21:51:05 UTC.