BHP (ASX:BHP) share price on watch as $800m of spending announced

BHP is set to begin working on one oil project and is starting the design phase of another
The post BHP (ASX:BHP) share price on watch as $800m of spending announced appeared first on The Motley Fool Australia. –

The BHP Group Ltd (ASX: BHP) share price is on watch following news the company has approved the Shenzi North project and an update on the Trion project.

BHP’s Board has approved spending US$544 million to begin work at the Shenzi North project. Simultaneously, BHP has agreed to spend US$258 million on the Trion project’s front end engineering design (FEED) phase.

The BHP share price finished yesterday’s session trading for $53.14 per share.

Let’s take a closer look at today’s news from BHP.

BHP’s big spending

The BHP share price is in the spotlight this morning after the company announced it has put forward capital to start work at its Shenzi North project in the Gulf of Mexico.

The company stated the project will produce 30 million barrels of oil per day, each estimated to be worth approximately US$25.

That leaves the project with an internal returns rate of more than 35%. The company believes its investment in the project will be earned back over 2 years. Production at the project is expected to begin in the 2024 financial year.

BHP owns 72% of the Shenzi North project after it purchased an extra 28% holding for US$505 million last year.

The BHP share price gained 3.4% on the day the purchase was announced.

Repsol holds the remaining 28% of the Shenzi North project. Repsol is expected to make a final investment decision on the project before the end of the year.

BHP also released news of its Trion oil project, based in Mexico.

The company has approved spending US$258 million to begin the project’s FEED phase.

Following a successful FEED process, the company expects to make a final investment decision on the Trion project in the middle of next year.

BHP owns 60% of two blocks at Trion which contain the Trion discovery. It purchased the holding for US$62.4 million in 2016. However, it agreed to pay an additional US$624 million if it was decided the project will move beyond the minimum work program.

BHP also agreed to spend an extra US$570 million on the project’s minimum work contribution.

Commentary from management

BHP’s president operations petroleum Geraldine Slattery commented on the news that might drive the BHP share price today, saying:

Both Shenzi North and Trion are strong growth assets for our business, providing attractive returns from relatively low carbon intensity resources.

Shenzi North is aligned with the petroleum strategy to unlock and deliver further growth options in this key Gulf of Mexico heartland. This Board decision also marks an important milestone in advancing the Trion development as we continue to work with our partner PEMEX towards a final investment decision in calendar year 2022.

BHP share price snapshot

It’s been a good year for the BHP share price. It has gained 23% since the start of 2021. It is also 33% higher than it was this time last year.

 However, its fallen 1.7% over the past 7 days.

The post BHP (ASX:BHP) share price on watch as $800m of spending announced appeared first on The Motley Fool Australia.

Should you invest $1,000 in BHP right now?

Before you consider BHP, you’ll want to hear this.

Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now… and BHP wasn’t one of them.

The online investing service he’s run for nearly a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.

*Returns as of May 24th 2021

More reading

3 ASX 200 mining giants making moves towards renewables

BHP (ASX:BHP) big dividend payday might even exceed expectations
Why the BHP (ASX:BHP) share price is up 2.5% and nearing a record high
Why ASX lithium shares are beating the iron ore majors – again

Own BHP (ASX:BHP) shares? Here’s what to look for during reporting season

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

Trade The World Anywhere & Anytime!

Mobile app platform with over 50,000 global listed securities across 12 markets (over 70% global market capitalisation), right from your Android or iOS device.

Integrated with exclusive trading idea and investment analysis tools to help you find actionable insight on virtually every financial instrument across our 12 global markets, to help you optimise your trading strategies.

Refer Your Friends

Tell your friends about Monex and gift them FREE access to our trading tools.

We respect your privacy and will only send this one email notification to your friends. 

Share With Your Friends

Share on facebook
Share on twitter
Share on linkedin

Monex Trading Tools Access and Usage Terms

The Monex Trading Tools (referred to as ‘tools’ hereafter) are available to you inside your client portal;

To activate access to the tools, you must have a verified and approved trading account and have made a deposit of at least AUD $1000.

An active and funded account with a positive trading balance is required to continue to have access to the tools;

Although the tools are available to you indefinitely, Monex Securities may at it’s discretion disable access to the tools in the future;

Monex securities reserves the right to change these terms and conditions from time to time, as it sees fit, without notice.

Important Notice
iOS & Android App - 12 International Markets & Over 70% Global Market Cap. $0 Brokerage On US Trades. Click Here!