MELBOURNE (Reuters) - BHP Billiton Ltd (AX:BHP) (L:BLT) is looking to take advantage of a slump in oil prices to pick up assets where it can use its deepwater drilling expertise to boost growth as it slows expansion in onshore shale, its petroleum head said.
The world's biggest miner has slashed its U.S. onshore drilling and development by more than half, flagging last week that it would spend just $1.5 billion (953 million pound) in the 2016 financial year, down from $3.4 billion in the current year.
"We're not going to rely on the U.S. shale. We're going to have to expand back into the conventional business," BHP's petroleum president, Tim Cutt, told reporters on Monday on the sidelines of an Australian oil and gas conference.
The shift reflects BHP's view that oil prices will rebound after around 2018 as a supply gap opens up due to a lack of new sources of cheap supply, while it sees U.S. natural gas prices holding below $5 per million British thermal units until at least 2020.
"We want to look for assets where we could bring our technological advantage - where we could do it faster, we could do it cheaper," Cutt said, pointing to BHP's skills drilling in the Gulf of Mexico.
The company was unlikely to look at taking over any oil producers as that would require paying a premium.
"We're not going to be willing to put a big premium on the table at this point of the cycle," Cutt said.
BHP expanded into U.S. shale in 2011, spending nearly $17 billion to acquire Fayetteville assets from Chesapeake and taking over Petrohawk Energy to get into the promising Eagle Ford and Permian basins just before U.S. gas prices slumped.
It has since written about $3 billion off the value of those assets, mostly on the Fayetteville acquisition, but says it is comfortable with its position in shale now.
With the slump in oil prices, it has been rapidly cutting its rig count onshore. It slashed the number of rigs from 26 to 17 in the March quarter and said last week it would cut that to 10 in the 2016 financial year.
It still expects its petroleum division to produce 255 million barrels of oil equivalent in the year to June 2015, up 5 percent on last year due to rapid growth at its onshore shale assets, but sees onshore output flattening next year.
