BHP Billiton’s petroleum chief Tim Cutt remains upbeat on the outlook for the group’s $US30 billion ($37bn) push into the onshore US shale industry despite returns being punished by slumping oil and gas prices.

Speaking to The Australian on the sidelines of the Australian Petroleum Production & Exploration Association’s annual conference in Melbourne, the Houston-based Mr Cutt said BHP believed its shale business is “going to make us a whole lot of money”.

The confidence is despite BHP pulling back capital expenditure on growing the business from a peak of $US4bn to an annual rate of $US1.5bn, with drilling of new gas wells halted and new oil wells restricted to “sweet spots’’ in the group’s acreage.

“So we believe, going forward, even at lower prices, with the pullback we’ve made, that we are going to have a good positive shale business, from 2016 on.’’

“We’ve slowed down, and a lot of that slowdown is really to try and time for value,’’ Mr Cutt said.

His comments should allay market concerns that previous guidance that the US shale business — kicked off in 2011 with $US20bn in acquisitions — should be cash-flow-positive by 2016 would be difficult to achieve under lower oil and gas price scenarios. But Mr Cutt added that even in the oil sweet spots, another pullback was on the cards if crude was to retreat to the low $US50-a-barrel level.

BHP has yet to recast production guidance for the business in light of the slowdown although Mr Cutt did say that because of productivity improvements and lower operating costs in the wake of the oil price fall, BHP would now be able to achieve in the business for $US3bn in capex what used to cost $US4bn.

BHP previously said that it expected oil production by the (unconventional) US shale industry on the whole could plateau within a decade. To ensure long-term growth of the petroleum business, and to reduce the weighting of gas in its portfolio, BHP plans an ­aggressive multi-country exploration program for conventional sources of oil.

“Our portfolio is a bit gassy ... so there is not a compelling need to get a lot more gas. The obvious answer is we need more oil in the portfolio,’’ Mr Cutt said.

“You can either go buy it or you can find it, and you know, if you buy it, you pay a premium,’’ Mr Cutt said.

Despite the preference for the drill bit over mergers and acquisition activity, Mr Cutt said that was not to say that now isn’t a good time to be looking for M&A opportunities.

He revealed the petroleum arm looks at about 200 M&A opportunities a year. But again, there was an aversion to “putting a big premium on the table”.

Mr Cutt said the company’s preference to explore for new growth opportunities would see BHP “testing some things that could be quite interesting’’ inside of the next three years, with high-­impact wells being planned for the Caribbean, the Gulf of Mexico (and potentially waters off ­Mexico), and off the coast of Western Australia.

This article first appeared in The Australian Business Review.