U.S. oil field development extends into 2018 on the back of increased spending, but total petroleum production falters on field maturation, BHP Billiton said.

Onshore U.S. production for the Australian energy and mining giant is expected to decline because the development of new activity won't be enough to offset natural decline from existing assets. Nevertheless, CEO Andrew Mackenzie was bullish about the potential for offshore work and onshore exploration and production.

"The recently approved Mad Dog phase 2 project will extend low-risk oil volumes as supply tightens while in the near-term, onshore U.S. development activity is to increase with up to 10 rigs planned for the 2018 financial year," he said in a statement.

The company holds a 23.9 percent stake in the Mad Dog project in the U.S. waters of the Gulf of Mexico, a program controlled by British energy company BP. Production by 2022 is expected to be around 140,000 gross barrels of crude oil per day.

In April, BHP dismissed a push by managers at hedge fund Elliot Associates and Elliot International, which hold minor shares in the company, to split off its U.S. oil division in order to unlock tens of billions of U.S. dollars in shareholder value.

In its latest statement, the company said the expanded rig program could contribute to as much as 35 percent of its petroleum production growth by 2019. Capital spending, meanwhile, declined by 41 percent from last year to $1.5 billion. For next year, the company said it would spend $2 billion, with the majority of that going toward shale basins in the United States.

The company said it expected to produce about 208 million barrels of oil equivalent for full-year 2017, with the majority of that coming from offshore programs. That's a 13 percent decline from last year.

As Mackenzie expressed optimism about the road ahead in February, Bank of America- Merrill said the price for Brent crude oil, the global benchmark, could average $59 per barrel during the second half of 2017. The price for Brent was around $49 per barrel early Wednesday and BHP said it expected an average realized price for oil at $48 per barrel for the year.

BHP Billiton is the fourth-largest iron ore producer in the world and expects more output next year.

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Washington DC (SPX) Jul 18, 2017
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