BHP Billiton sees market balance approaching

CANBERRA, Australia, Oct. 19 (UPI) -- The energy market should improve over the next year or so as signs of rebalancing appear on the horizon, Australian company BHP Billiton said.

The company, among the largest of its kind, said Wednesday the combination of capital discipline and market improvements were cause for mid-term optimism.

"We have seen early signs of markets rebalancing," CEO Andrew Mackenzie said in a statement. "Fundamentals suggest both oil and gas markets will improve over the next 12 to 18 months."

The company earlier this year enacted deep cuts in spending on petroleum operations, hinting that more would be coming in the next fiscal year.

The company just two months ago posted an underlying profit of $1.9 billion, 14 percent lower year-on-year, revenue of $30.1 billion for the fiscal year ending June 30, a 31 percent decline, and $4.9 billion in write-offs associated with its oil and natural gas portfolio in the United States.

Mackenzie at the time said market conditions over the last year were "challenging." Since then, members of the Organization of Petroleum Exporting Countries pledged to work with non-member states on a proposal to freeze production levels in an effort to pull the market back toward balance.

An increase in total global oil production from countries like shale-rich United States and de facto OPEC leader Saudi Arabia pushed the market heavily toward the supply side. Speaking at an energy conference in London this week, BP CEO Bob Dudley said that while demand for energy products was strong, supplies were even stronger.

Mackenzie said production and spending plans would remain largely in place. About $1.4 billion is reserved for petroleum investments alone. For output, BHP said production for September declined by 15 percent.

BHP Billiton in February posted its first loss in more than 16 years and cut its dividend paid to shareholders by about 75 percent.