April 12 (UPI) -- Australian energy and mining company BHP Billiton has everything in place to increase shareholder value, it said in response to calls to break up its portfolio.
In a letter made public on Monday, managers at hedge fund Elliot Associates and Elliot International, which hold minor shares in BHP Billiton, called on the Australian company to split off its U.S. oil division in order to unlock tens of billions of U.S. dollars in shareholder value.
BHP dismissed the call early this week. In a statement Wednesday, the Australian company said its structure was already established for growth.
"BHP Billiton is now a stronger, simpler company, well-positioned for future economic conditions," CEO Andrew Mackenzie said. "We are confident we have everything in place to increase returns and significantly grow shareholder value."
The multinational company, which holds assets from mining to oil, reported a net profit of $3.2 billion for the six months ending Dec. 31. That compares with a loss of $7.8 billion during the first six months of last year, a period that saw crude oil prices hit a historic low.
Outside of sectors like copper, the company in early February gave the green light to spending more than $2 billion to help develop the Mad Dog project in the Gulf of Mexico.
For its entire portfolio, Mackenzie said holdings were "large, long-life and low-cost." With a balance sheet that's stronger after last year's market downturn, the company in its earnings report from early this year said it would raise the overall interim dividend it pays out to shareholders to 40 U.S. cents per share.
Elliot said in its letter Monday that BHP's oil assets in the United States are limited in their potential and therefore a waste of capital.
In its response Wednesday, BHP said maneuvering in the way proposed by Elliot was save less the company less than $2.5 million per year while erasing at least $1.3 billion in value.
"Petroleum remains core to the BHP Billiton strategy and has the potential to create significant long term value at high returns," it said.