Banking

Mining Giant Looks To Exit Oil Business, Once Deemed Long-Term Anchor, While It Still Can

Mining giant BHP (BHP) is mulling an exit from the multibillion dollar oil-and-gas business before a sale gets more difficult. BHP stock rose.




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Australia’s BHP is considering options for its oil-and-gas unit including a trade sale, sources told Bloomberg. The world’s biggest miner wants to avoid getting stuck with assets that may become more difficult to sell as countries and companies continue to shift away from fossil fuels, sources said.

The timing of an oil exit could be good. Oil futures have rallied about 60% in the past year. And the last time oil prices were this high, in 2018, BHP sold its shale assets to BP (BP) for $10.7 billion.

BHP, which has been in oil and gas since the 1960s, previously called its oil business a strategic pillar, and it could be worth an estimated $15 billion or more, according to Bloomberg.

But getting out of fossil fuels could burnish its appeal with ESG-focused investors amid climate change concerns.


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BHP Stock

Shares rose 2.1% to 73.83 on the stock market today. BHP stock is working on an 82.17 buy point in a cup base, according to MarketSmith chart analysis.

Among other mining stocks, Anglo-American (NGLOY) added 0.9%, and Alcoa (AA) jumped 10.5% after the aluminum titan was upgraded to conviction buy from buy at Goldman Sachs, which cited a positive commodity price outlook.

Unlike Big Oil rivals, such as Exxon Mobil (XOM) and Chevron (CVX), BHP isn’t tethered to energy. Profits from coal and petroleum will make up just 7% of its earnings in the fiscal year ending June 30, according to RBC Capital Markets estimates. The rest come from copper and iron ore.

Find Aparna Narayanan on Twitter at @IBD_Aparna.

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