("BHP Billiton Swings to Annual Profit; Looks to Exit Shale -- Update," at 1134 GMT, misstated the day in the final paragraph. The correct version follows:)

 
 
   By Robb M. Stewart 
 

MELBOURNE, Australia--Activist investors scored a victory after BHP Billiton Ltd. (BHP.AU) said it was looking to sell its onshore U.S. oil-and-gas operations.

The Melbourne-based company, the world's largest listed miner by market value, said it had determined its shale operations in the U.S. were not core and it was actively looking at exit options. The news was accompanied by a sharp lift in BHP's second-half dividend as it swung back to an annual profit.

It follows months of campaigning by New York hedge fund Elliott Management Corp. Elliott had questioned the fit between BHP's petroleum division and mining of iron ore, copper and other minerals, calling for sweeping changes including spinning off the shale business, launching an independent review of BHP's global petroleum operations, and collapsing its dual British-Australian structure around a single main listing in Sydney.

BHP said it would complete well trials, swap some acreage and look at ways to increase the value, profitability and marketability of its extensive shale operations. BHP holds more than 838,000 acres in the shale-rich Eagle Ford, Permian, Haynesville and Fayetteville regions of the U.S.

BHP on Tuesday announced a threefold rise in its final dividend, joining fellow miners in rewarding shareholders as its fortunes have rebounded with a recovery in commodity prices. Rival Rio Tinto PLC (RIO.AU) this month set a high bar for the industry with its highest half-year dividend to date and increased share buy-back plans. Anglo American PLC (AAL.LN) also said it would reinstate a dividend slashed two years ago when commodity prices slumped.

Like its peers, BHP has spent recent years focused on ratcheting down costs and working to strengthen its balance sheet.

"Over the last five years, we have laid the foundations to significantly improve our return on capital and grow longterm shareholder value," said Jac Nasser, who will step down as BHP chairman at the end of the month, to be succeeded by director Ken MacKenzie.

The company recorded a net profit of US$5.89 billion in the 12 months through June, weaker than analysts had expected. But it was a sharp improvement from a year-earlier loss of US$6.39 billion when BHP absorbed an impairment hit on its onshore U.S. oil-and-gas business and a charge for the fatal 2015 dam failure at the Samarco iron-ore operation in Brazil. Revenue for the year climbed 24% to US$38.29 billion from US$30.91 billion.

With stronger cash-flow generation and a US$9.8 billion fall in net debt to US$16.32 billion, the company said it would pay a final dividend of US$0.43 a share against US$0.14 the year before, for a full-year payout of US$0.83.

"This strong momentum will be carried into the 2018 financial year, with volume growth of 7% and further productivity gains expected," Chief Executive Andrew Mackenzie said.

BHP has been on the defensive in recent months against the campaign waged by Elliott, which has criticized the company for wasting billions of dollars in shareholders' money investing in U.S. shale at the height of the natural-gas boom and mistimed share buybacks. The fund last week raised its stake in BHP's London-listed shares to 5% to put it in a position to call a shareholder meeting when it chooses.

Mr. Mackenzie recently admitted the company had overspent on its shale assets and had since pivoted toward conventional assets. However, BHP has said the cost of unifying its share structure would outweigh any savings.

The world's big mining companies have restored profits selling commodities including iron ore and copper needed for everything from high-rise apartments and office towers to power and communications cables. Although growth in China has been cooling, its demand for metals has remained strong, supported by stimulus measures.

The prices for most of the commodities BHP extracts rose strongly over the last year. Iron ore, a big engine for its earnings, climbed by more than 30% and steel-making coking coal more than doubled.

Also on Tuesday, BHP said it was launching a multicurrency bond repurchase plan capped at US$2.5 billion, that would target certain euro medium-term notes and bonds issued under a U.S. debt program. Funded by a US$14.2 billion cash position, it said the purchases would extend its average debt-maturity profile.

 

Write to Robb M. Stewart at robb.stewart@wsj.com

 

(END) Dow Jones Newswires

August 21, 2017 20:05 ET (00:05 GMT)

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