BHP dumps oil exploration project

BHP has dumped plans to explore an oil and gas well off the The Philippines coast as the company continues to pull out of energy projects not located in the US or Australia.

The Cinco well was expected to cost $60 million to explore, with BHP stating that the “exploration program in The Philippines is not a strategic fit”.

BHP was due to drill the Cinco -1 well as part of a deal with Otto Energy.

Otto said it would look at taking legal action against BHP’s decision to axe the farm-in deal.

“Otto has yet to receive any written notification from BHPB or detailed substantiation for the basis of the decision,” the company said in a statement.

“Otto will strenuously enforce its full legal rights.”

The decision comes as BHP continues to focus on returns and cashflow in an attempt to cut spending by 18 per cent in the 2014 budget. 

Two weeks ago the mining giant exited nine of ten exploration interests in India.

“The decision to relinquish these blocks is the result of an exploration portfolio review,” the company said at the time. 

BHP CEO Andrew Mackenzie said “substantial” cash cutting costs would be made when he stepped into the top job earlier this year.

Mackenzie said the miner would reduce capital and exploration expenditure to $US18 billion for the next financial year, down from $US22 billion the previous year. 

He warned that BHP’s spending would continue to ‘‘decline substantially’’ going forward, favouring productivity efficiencies and attempting to maximise profits from existing projects, whilst freeing up cash flow.

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