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BHP - operational review
Exceeded full year production guidance for petroleum and met revised guidance for copper and iron ore. Metallurgical coal and energy coal production marginally below guidance predominantly as a result of lower than expected wash plant yields and adverse weather impacts during the June 2019 quarter.
Group copper equivalent production increased by 11% in the June 2019 quarter reflecting a strong operational performance across the portfolio, particularly at Western Australia Iron Ore and Queensland Coal which achieved annualised run rates above 290 Mt (excluding the impact of Tropical Cyclone Veronica) and 48 Mt respectively during the quarter.
Group copper equivalent production for the 2019 financial year declined by 2%/(1)/, with annual production records at two petroleum and four minerals operations, offset by grade and natural field decline, weather-related interruptions and several unplanned outages.
We expect to achieve full year unit cost guidance/(2)/ at Petroleum, Escondida and Western Australia Iron Ore. Queensland Coal and New South Wales Energy Coal unit costs are expected to be marginally above guidance (based on 2019 financial year guidance exchange rates of AUD/USD 0.75 and USD/CLP 663).
Group copper equivalent production/(1)/ for the 2020 financial year is expected to be slightly higher than the 2019 financial year despite a ~7% decline in petroleum volumes largely due to natural field decline.
In Petroleum, the Bele-1, Tuk-1 and Hi-Hat-1 exploration wells in Trinidad and Tobago all encountered hydrocarbons during the quarter. Over the full year, seven out of nine wells drilled were successful.
All major projects under development are tracking to plan.
Underlying improvements in productivity were largely offset by the impact of unplanned production outages of US$835 million during the first half, in addition to grade decline in copper, and higher unit costs in coal. A negative movement of approximately US$1 billion is now expected to be recorded for the 2019 financial year.
Major development projects
During the year, the North West Shelf Greater Western Flank-B project achieved first production ahead of schedule and under budget. The BHP Board also approved the Atlantis Phase 3 project in the US Gulf of Mexico. At the end of the 2019 financial year, BHP had five major projects under development in petroleum, copper, iron ore and potash, with a combined budget of US$11.1 billion over the life of the projects.
BHP expects its financial results for the second half of the 2019 financial year to reflect certain items. The financial statements are the subject of ongoing work that will not be finalised until the release of the financial results on 20 August 2019. Accordingly the information is subject to update.
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