Shares in BHP Billiton rallied 3% this morning after the mining giant returned to profit and pledged to sell its US oil shale assets.
BHP reported annual pre-tax profits of $10bn through to June versus a loss of $8bn in the prior year. Net debt declined by $10bn.
Commodity price boost
Higher prices for industrial commodities drove a substantial improvement in the bottom line with earnings before interest tax and depreciation (EBITDA) rising strongly across its coal, iron ore and copper business segments.
Iron ore was by far the largest business segment in EBITDA terms for the 2017 financial year, generating over $9bn. However, the coal segment saw the biggest improvement, with EBITDA of $3.8bn marking a five-fold increase on the $0.6bn delivered in the 2016 year.
In contrast, there was only a slight improvement in performance from its petroleum unit, as flagging oil prices continue to hold back the business.
BHP claimed a number of bidders were considering acquiring its onshore US oil and gas unit. The move is being cheered by investors, especially as it was forced to announce a $7.2bn writedown on the division last year.
Activist shareholders such as Elliott Management and Tribeca have been calling for a sale of the US shale business for some time.
Despite the substantial improvement from the prior year, overall earnings were behind expectations, as was the final dividend, at 43 cents per share.
The market, however, responded positively to BHP´s progress on cutting debt.
Mining stocks are generally enjoying a good result´s season this year due to the significant improvement in industrial commodities prices.
Yesterday, shares in Australian miner Fortescue Metals surged after the company reported strong earnings.