26 April 2013 Asia Pacific/Australia Equity Research Diversified Metals & Mining (Diversified Resources (AU))

BHP Billiton (BHP.AX / BHP AU) Rating NEUTRAL* STRATEGIC ANALYSIS

Price (26 Apr 13, A$) 32.58 Target price (A$) 35.00¹ Market cap. (A$mn) 162,939.47 Petroleum the new problem child Yr avg. mthly trading (A$mn) 6,727 Last month's trading (A$mn) 6,754 Projected return: ■ Petroleum providing challenges: Iron ore and Petroleum account for the Capital gain (%) 7.4 lion’s share of BHP’s production growth to FY18. Iron ore prices are Dividend yield (net %) 3.8 expected to trend to US$90/t (real, China fines, CFR) and EBIT margins will Total return (%) 11.2 moderate from a high 63% in FY12 to a still impressive 47% with EBIT/net 52-week price range 39.0 - 30.2 operating assets falling from 81% to 33%. Petroleum accounts for ~41% * Stock ratings are relative to the relevant country benchmark. (US$31bn) of forecast capex to FY18 and the majority of this (US$23bn) is ¹Target price is for 12 months. expected to go to Onshore. Petroleum EBIT margins are forecast to decline Research Analysts from 47% to 37%, EBIT/net operating assets to 15% from 17%. Paul McTaggart ■ Historic asset position a difficult legacy: BHP’s Onshore assets are in the 61 2 8205 4698 books at $7bn over our DCF valuation (which includes $3bn for the Permian). [email protected] Our modelling requires long run HH pricing of over $6/mmbtu to match this. James Gurry 44 20 7883 7083 While IRRs for shale investments can reach 14-25%, high depletion charges [email protected] (+$2.60/mcf) will continue to impact on accounting asset returns. Martin Kronborg ■ Balance sheet constrained near term: We forecast a dividend of 61 2 8205 4369 US$1.17/shr in FY13 for a payout ratio of 49%. Gearing (ND:ND+E) is [email protected] forecast at 28% in FY13-14 while capex remains elevated (US$22bn in James Redfern FY13, $17bn in FY14). A $7bn write-down (to match Onshore carrying value 61 2 8205 4779 [email protected] to our valuation) would see gearing over 30% and we think that rules out the possibility of positive capital management surprise. ■ Decks to be cleared?: The challenge facing BHP’s new management team is to convince investors that Onshore warrants +$20bn of investment despite less-than-impressive return on assets. While we believe the $20bn of investment will generate +COC, we think the problem is the carrying value of the Petrohawk assets; the subsequent D&A charge is depressing both EBIT margins and ROA. We think further Onshore asset write-downs are likely. ■ No change to Neutral rating, target price of A$35: We see BHP as fairly valued trading on FY14 PE of 13.5x and in line with our DCF valn. of A$33.7.

Share price performance Financial and valuation metrics

Year 06/12A 06/13E 06/14E 06/15E Price (LHS) Rebased Rel (RHS) Revenue (US$mn) 72,226.0 67,262.9 69,225.7 70,711.0 60 120 EBITDA (US$mn) 33,746.0 28,977.9 29,910.7 30,879.3 50 100 40 EBIT (US$mn) 27,338.0 22,095.3 22,122.4 22,475.7 30 80 Net income (US$mn) 17,217.0 13,052.8 13,537.0 13,796.4 20 60 EPS (CS adj.) (USc) 322.05 239.72 248.62 253.38 Apr-11 Aug-11 Dec-11 Apr-12 Aug-12 Dec-12 Change from previous EPS (%) n.a. 0.18 0.15 -0.03 The price relative chart measures performance against the S&P Consensus EPS (USc) n.a. 251.00 308.70 323.80 ASX 200 Index which closed at 5097.5 on 26/04/13 EPS growth (%) -25.1 -25.6 3.7 1.9 On 26/04/13 the spot exchange rate was A$.97/US$1 P/E (x) 10.4 14.0 13.5 13.3

Dividend (USc) 112.00 116.85 128.83 142.03 Performance Over 1M 3M 12M Dividend yield (%) 3.3 3.5 3.8 4.2 Absolute (%) -1.8 -12.2 -7.2 P/B (x) 2.8 2.5 2.3 2.1

Relative (%) -3.9 -17.6 -23.7 Net debt/equity (%) 35.1 38.8 38.8 35.1

Source: Company data, ASX, Credit Suisse estimates, * Adj. for goodwill, notional interest and unusual items. Relative P/E against ASX/S&P200 based on pre GW in AUD. Company PE calculation is based on displayed EPS Currency

DISCLOSURE APPENDIX CONTAINS ANALYST CERTIFICATIONS AND THE STATUS OF NON US ANALYSTS. US Disclosure: Credit Suisse does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the Firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision.

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26 April 2013

Petroleum Chief exit opening the way for a shale rethink? What really matters While there are many moving parts to BHP, it’s clear that new CEO Andrew Mackenzie will have to focus on what matters most and BHP’s Onshore assets will loom large:

■ Commodity prices are expected to decline and against that backdrop, EBIT margins and return on assets will be under pressure.

■ Iron ore and Petroleum account for the lion’s share of BHP’s production growth to FY18. Iron ore prices are expected to trend to long run levels of US$90/t (China fines, CFR) and EBIT margins will moderate from a very high 63% in FY12 to a still impressive 47% with EBIT/net operating assets falling from 81% to 33%.

■ Petroleum accounts for ~41% (US$31bn) of forecast capex to FY18 and the majority of this expenditure (US$23bn) is going into the Onshore US gas assets on our estimates.

■ Petroleum EBIT margins are forecast to decline from 47% to 37% and EBIT/net operating assets to 15% from 17% (as liquids mix shifts from condensate to NGLs) - suggesting that Petroleum could become a problem child for BHP. The challenge facing BHP’s new CEO and its new Petroleum President (Tim Cutt) is to convince investors that Onshore warrants +$20bn of investment despite a less-than- impressive return on assets reflecting, in part, the acquisition price paid for Petrohawk and the Fayetteville assets. We believe the $20bn of investment will give a return well over cost of capital. We think the problem is the carrying value of the Petrohawk assets as BHP carries these assets at ~$7bn over our DCF valuation and the subsequent D&A charge is depressing both EBIT margins and return on assets. We think further Onshore asset write-downs are likely. Balance sheet won’t enable a WPL-style special dividend or payout ratio anytime soon

■ BHP remains committed to its progressive dividend policy. We forecast a dividend of US$1.17/shr in FY13 for a payout ratio of 49%. Gearing (ND:ND+E) is forecast at 28% in FY13 and FY14 while capex remains elevated (US$22bn in FY13 and $17bn in FY14).

■ While this level of gearing is clearly no problem for BHP, during a period of weaker commodity prices it probably means that BHP will continue to maintain a prudent capital structure.

■ A $7bn write-down (to match Onshore carrying value to our valuation) would see gearing over 30% and we think that rules out the possibility of positive capital management surprise. Declining commodity prices offset much of BHP’s production growth CS commodity prices declining In our recent Commodity Quarterly we revised down our house commodity forecasts and the impact on our CS commodity index is shown below:

■ The USD index is forecast to decline by 23% over the period to end 2017.

BHP Billiton (BHP.AX / BHP AU) 2 26 April 2013

■ The AUD index is forecast to decline by 15% over the period to end 2017 as the USD:AUD FX rate declines to 0.90.

Figure 1: CS Commodity index – USD terms Figure 2: CS Commodity index – AUD terms 250 250

200 200

150 150

100 100

50 50

0 0

USD Index (real) Forecasts AUD Index (real) Forecasts Source: Bloomberg, Credit Suisse estimates Source: Bloomberg, Credit Suisse estimates Of course, the one thing we do know about our forecasts is that they will be wrong! While prices will be volatile, the general takeaway is that CS holds the view that the commodity bull market is over and that price are returning to a “normal” levels that we experienced prior to the mid 2000s China boom. Not all commodities that make up our index are moving in the same direction. While iron ore prices are expected to move materially lower from current levels, we are looking for recovery in pricing for most commodities (Figure 3) with the biggest gains in nickel and coal.

Figure 3: CS Commodity price and FX forecasts 2013E 2014E 2015E 2016E 2017E 2018E LT (nom '18) LT (real '13) Iron ore - fines, qtrly, China CFR US¢/dmtu 200 161 145 145 153 154 157 145 Iron ore - fines (62%), China CFR US$/t, dry 124 100 90 90 95 95 97 90 Hard coking coal US$/t 172 178 183 188 190 189 184 170 Semi hard coal US$/t 142 151 156 160 162 161 152 140 Thermal coal US$/t 90 93 100 102 105 105 108 100 Alumina (spot) US$/t 348 350 360 400 400 404 433 400 Aluminium US$/lb 0.90 0.95 0.91 0.86 0.91 0.93 1.10 1.02 Copper US$/lb 3.40 3.05 2.80 2.85 3.10 3.10 3.25 2.99 Lead US$/lb 1.05 1.20 1.35 1.25 1.10 1.10 1.00 0.91 Zinc US$/lb 0.95 1.05 1.20 1.15 1.00 1.00 0.90 0.85 Nickel US$/lb 7.65 7.70 8.40 9.05 9.55 9.55 9.80 9.07 Brent crude oil US$/bbl 103.3 102.0 97.0 97.0 97.0 96.2 90.4 90.0 Gas - Henry Hub US$/MMBtu 3.65 4.00 4.25 4.60 4.80 5.08 7.04 4.50 Uranium (spot) US$/lb 46.38 56.00 65.00 70.00 65.00 65.67 70.36 65.00 Gold US$/oz 1,580 1,498 1,420 1,400 1,380 1,383 1,407 1,300 Silver US$/oz 28.43 27.20 26.80 25.90 25.10 25.05 24.70 22.80 Platinum US$/oz 1,655 1,793 1,880 1,850 1,820 1,836 1,948 1,800 Palladium US$/oz 769 880 950 980 900 909 974 900 AUD/USD 1.01 0.96 0.94 0.92 0.90 0.89 0.85 0.85 Source: Credit Suisse estimates Commodity prices restrict revenue growth Figure 4 below sets out summary production and profit loss for BHP Billiton. FY12 earnings were generated off the rump of earlier high commodity prices so taking FY13 as a base, over five year period to end FY18 we see:

■ Oil volume growth of 45%.

■ Iron ore volume growth of 45%.

■ Met coal volume growth of 25%.

BHP Billiton (BHP.AX / BHP AU) 3 26 April 2013

■ Revenue growth of 10%.

■ EBIT margins improve from 32% to 34% over the period as Coal and Stainless Steel Materials benefit from an expected recovery in pricing.

■ NPAT grows by 27% given reducing interest costs as gearing (ND:ND+E) declines from 28% to 16% as capex forecasts fall from US$22bn to $11bn.

Figure 4: BHP price, production and profit and loss Key assumptions FY12 FY13F FY14F FY15F FY16F FY17F FY18F Exchange rate (AUD / USD) 1.03 1.03 0.98 0.95 0.93 0.91 0.90 Aluminium (US$/lb) 0.99 0.90 0.91 0.92 0.88 0.88 0.91 Alumina (US$/t) 337 333 350 355 380 400 401 Copper (US$/lb) 3.74 3.55 3.18 2.88 2.83 2.97 3.09 Iron ore, fines (US$/t) 85 125 108 94 90 93 95 Coking coal (US$/t) 261 183 175 182 186 189 190 Thermal coal (US$/t) 111 87 90 98 101 104 105 Manganese (US$/t) 284 300 300 297 284 283 281 Gold (US$/oz) 1,672 1,647 1,538 1,448 1,410 1,390 1,381 Zinc (US$/lb) 0.92 0.90 0.99 1.13 1.16 1.07 0.99 Oil, Brent 106 109 110 104 98 95 95 Gas - Henry Hub ($/Mmbtu) 3.17 3.34 3.85 4.15 4.43 4.70 4.80 Production schedule (attributable) FY12 FY13F FY14F FY15F FY16F FY17F FY18F Total Petroleum products, Mmboe 222 239 265 291 311 329 346 Crude oil & condensate, Mmboe 71 74 77 78 77 74 75 Alumina ('000 tonnes) 4,152 4,870 5,150 5,193 5,193 5,193 5,193 Aluminium ('000 tonnes) 1,153 1,170 1,205 1,205 1,205 1,205 1,205 Copper ('000 tonnes) 1,089 1,193 1,321 1,362 1,328 1,275 1,234 Zinc ('000 tonnes) 112 111 133 133 133 133 133 Uranium oxide concentrate (tonnes) 3,885 4,119 4,125 4,125 4,125 4,125 4,125 Nickel ('000 tonnes) 158 154 164 164 164 164 164 Iron Ore (kt) (global) (attributable) 159,478 167,025 187,455 212,284 230,288 243,262 242,258 Iron Ore (kt) (global) (100%) 197,028 205,903 229,357 257,696 277,358 291,148 290,000 Iron Ore (kt) (WA) (attributable) 148,055 155,607 175,671 197,784 215,288 228,262 227,258 Iron Ore (kt) (WA) (100%) 174,182 183,067 205,789 228,696 247,358 261,148 260,000 Manganese ore ('000 tonnes) 7,931 8,463 8,400 8,400 8,400 8,400 8,400 Manganese alloy ('000 tonnes) 602 568 650 750 750 750 750 Metallurgical Coal (Mt, attributable) 33,230 35,926 40,300 43,900 44,750 44,750 44,750 Energy Coal (Mt) 71,111 72,363 74,950 76,500 77,300 69,300 69,300 P&L ($US'mn) FY12 FY13F FY14F FY15F FY16F FY17F FY18F BHP Billiton Group revenue 72,226 67,263 69,226 70,711 72,003 74,451 76,223 Other Income 906 2,610 1,000 1,000 1,000 1,000 1,000 Net BHP Billiton revenue 73,132 69,873 70,226 71,711 73,003 75,451 77,223 Total operating expenses 39,386 40,895 40,315 40,832 41,205 41,420 41,355 EBITDA - Underlying 33,746 28,978 29,911 30,879 31,798 34,030 35,868 Depreciation & amortisation -6,408 -6,883 -7,788 -8,404 -8,994 -9,436 -9,641 Underlying EBIT 27,338 22,095 22,122 22,476 22,804 24,594 26,227 Net interest + other -730 -1,066 -1,073 -1,023 -995 -976 -885 Profit before tax 26,608 21,029 21,050 21,453 21,809 23,619 25,342 Company income taxation -7,490 -7,836 -7,367 -7,509 -7,633 -8,267 -8,870 OEI -115 -140 -145 -148 -151 -163 -175 Underlying NPAT 19,003 13,053 13,537 13,796 14,025 15,189 16,297 Source: Company data, Credit Suisse estimates We expect BHP cost performance to be strong as volume growth sees unit operating costs improve substantially. However, the decline in commodity prices restricts revenue growth viz a viz volume growth. Capital intensity rises – EBIT/total assets is stable given expanding margins The follow on effect of volume growth outpacing revenue growth is rising capital intensity:

■ Plant and equipment rises by 25% over the period FY13 to end FY18, total assets by 26%.

BHP Billiton (BHP.AX / BHP AU) 4 26 April 2013

■ EBIT/net operating assets contracts from 22% to 20% - relatively stable and reflects the fact that EBIT margins expand to 34% (courtesy of Coal and Stainless Steel Materials).

■ EBIT margins for Petroleum decline from 49% to 37% with the oil price as does EBIT/net operating assets (from 18% to 15%). The problem for BHP is that while Petroleum is its largest division and accounts for 36% of the asset base and in FY13 represents 30% of EBIT, it also accounts for 41% of forecast capex over the period to end FY18. Petroleum to be the worst performing of the major asset suites Petroleum a key driver of production growth As noted, Iron ore and Petroleum share the honors regarding volume growth for BHP. Within the Petroleum business, the growth in volume output is all driven by expanding US Onshore production – and Onshore margins and return on assets is materially lower than the levels achieved by BHP’s other oil and gas assets (Figure 12). Onshore generated EBIT losses of $140m in FY12 and is forecast to generate a loss of $102m in FY13 (with a 1H FY13 loss of $147m already recorded).

Figure 5: BHP Petroleum production forecast Figure 6:Petroleum forecasts – EBIT, Net operating assets (US$m) and ROIC

350 45,000 50% 300 40,000 45% 40% 250 35,000 30,000 35% 200 30% 25,000 150 25% 20,000 100 20% 15,000 15% 50 10,000 10% 0 5,000 5% FY12 FY13F FY14F FY15F FY16F FY17F 0 0% Gulf of Mexico total Australia total FY10 FY12 FY14F FY16F FY18F

Other global operations Onshore US EBIT Net operating assets ROIC

Source: Company data, Credit Suisse estimates Source: Company data, Credit Suisse estimates

BHP Billiton (BHP.AX / BHP AU) 5 26 April 2013

Figure 7: BHP Business divisional metrics

BHP business unit overview, USDm FY12 FY13F FY14F FY15F FY16F FY17F FY18F Revenue Petroleum 12,937 13,513 15,758 16,401 16,368 16,496 16,988 Aluminium 1,277 1,458 1,713 1,751 1,875 1,973 1,980 Base Metals 11,596 12,490 12,341 11,888 11,550 11,485 11,434 Diamonds and Specialty Products 1,326 539 0 0 125 750 1,250 Stainless Steel Materials 2,993 2,732 2,768 2,911 3,157 3,362 3,448 Iron Ore 22,601 20,344 19,299 19,145 19,925 21,601 22,123 Manganese 2,152 2,113 2,217 2,235 2,235 2,235 2,235 Metallurgical Coal 7,576 5,659 6,593 7,473 7,799 7,948 7,981 Energy Coal 6,022 5,128 5,334 5,751 5,980 5,641 5,711 Group and unallocated items 3,746 3,287 3,204 3,156 2,989 2,960 3,074 BHP Billiton Group revenue 72,226 67,263 69,226 70,711 72,003 74,451 76,223

EBIT Petroleum 6,348 6,287 6,965 7,028 6,384 6,087 6,351 Aluminium -291 -178 -5 31 3 59 121 Base Metals 3,965 4,144 3,830 3,967 3,632 3,556 3,468 Diamonds and Specialty Products 199 -45 0 0 82 494 824 Stainless Steel Materials 32 -95 62 205 451 656 742 Iron Ore 14,201 11,401 9,695 8,777 8,813 9,940 10,467 Manganese 235 364 371 369 369 372 377 Metallurgical Coal 1,570 -50 749 1,159 1,928 2,216 2,597 Energy Coal 1,227 458 726 1,245 1,451 1,514 1,578 Group and unallocated items -148 -229 -300 -300 -300 -300 -300 Total BHP Billiton Group 27,338 22,058 22,091 22,480 22,813 24,594 26,227

EBIT Margin Petroleum 49% 47% 44% 43% 39% 37% 37% Aluminium -23% -12% 0% 2% 0% 3% 6% Base Metals 34% 33% 31% 33% 31% 31% 30% Diamonds and Specialty Products 15% -8% 0% 0% 66% 66% 66% Stainless Steel Materials 1% -3% 2% 7% 14% 20% 22% Iron Ore 63% 56% 50% 46% 44% 46% 47% Manganese 11% 17% 17% 16% 16% 17% 17% Metallurgical Coal 21% -1% 11% 16% 25% 28% 33% Energy Coal 20% 9% 14% 22% 24% 27% 28% Total BHP Billiton Group 37% 32% 31% 31% 31% 33% 34%

Net Operating Assets Petroleum 34,705 36,706 39,847 41,173 41,852 42,033 42,001 Aluminium 8,519 6,290 6,189 6,092 6,000 5,911 5,827 Base Metals 13,639 15,724 16,543 17,278 18,319 19,210 19,919 Diamonds and Specialty Products 4,714 2,792 2,700 4,700 7,508 10,011 10,248 Stainless Steel Materials 3,423 1,897 1,894 1,894 1,894 1,894 1,894 Iron Ore 17,425 23,235 27,264 29,206 30,687 32,132 32,010 Manganese 1,505 1,700 1,732 1,737 1,724 1,673 1,623 Metallurgical Coal 6,246 8,282 9,298 9,746 9,947 9,953 9,919 Energy Coal 4,288 4,726 4,894 4,911 4,905 4,890 4,877 Total BHP Billiton Group 94,394 101,282 110,291 116,668 122,768 127,638 128,249

Capex (ex exploration) Petroleum 6,230 6,875 5,615 5,040 4,796 4,612 4,483 Aluminium 852 148 181 180 179 179 178 Base Metals 2,650 2,108 1,734 1,696 2,146 1,867 1,745 Diamonds and Specialty Products 598 555 800 1,000 1,567 933 203 Stainless Steel Materials 513 299 208 208 208 208 208 Iron Ore 5,634 6,879 4,675 3,095 3,194 3,259 1,254 Manganese 418 298 193 174 148 119 115 Metallurgical Coal 2,808 2,555 1,438 975 696 544 542 Energy Coal 893 737 565 419 399 398 397 Total BHP Billiton Group (ex expl'n.) 20,623 20,467 15,509 12,887 13,432 12,218 9,224

EBIT/Net Operating Assets Petroleum 18% 17% 17% 17% 15% 14% 15% Aluminium -3% -3% 0% 1% 0% 1% 2% Base Metals 29% 26% 23% 23% 20% 19% 17% Diamonds and Specialty Products 4% -2% 0% 0% 1% 5% 8% Stainless Steel Materials 1% -5% 3% 11% 24% 35% 39% Iron Ore 81% 49% 36% 30% 29% 31% 33% Manganese 16% 21% 21% 21% 21% 22% 23% Metallurgical Coal 25% -1% 8% 12% 19% 22% 26% Energy Coal 29% 10% 15% 25% 30% 31% 32% Total BHP Billiton Group 29% 22% 20% 19% 19% 19% 20%

BHP Billiton (BHP.AX / BHP AU) 6 26 April 2013

Big delta in Onshore… We’ve noted this before but it’s worth remembering that with Eagle Ford producing just 30% liquids in 2012, and BHP targeting up to 50%, the impact on revenues should be significant as oil currently sells at a ~4x premium to US gas. In the near term, BHP will focus on the oil-rich wells in Black Hawk (70%+ liquids), at the expense of NGLs and NGs. This cannot be sustained indefinitely (Black Hawk is the smallest field at around ~58,300acres as of Nov 2011) and the production of condensate from Eagle Ford will likely decline from a near-term peak of 35% oil to 15%, with less valuable NGLs replacing the bulk of the decline. The bottom line impact is shown below in Figure 10 (and in Figure 17):

■ Onshore EBIT is still forecast to be negative in FY13 at a loss of $102m, the first half loss was $147m so 2H FY13 EBIT is forecast to be back in profit at $45m given an expected increase in the gas price from $3.14/mcf to $3.55/mcf. Looking to FY14, we forecast Onshore EBIT of $428m - and then $1bn in FY15 and $1.6bn in FY18.

■ In FY13 both Haynesville and Fayetteville are loss making at the EBIT level. We think Haynesville will be loss making until FY16 given higher drilling costs. Figure 8: CS Onshore production forecasts by type Figure 9: CS Onshore EBIT forecasts ($m)

300 18% 2,000 25% 16% 250 20% 14% 1,500 200 12% 15% 10% 1,000 10% 150

8% $m Mmboe 5% 100 6% 500 4% 0% 50 - 2% -5% - 0% -500 -10%

Natural Gas Condensate NGL Haynesville Fayetteville

Condensate % NGL % Eagle Ford EBIT Margin (RHS)

Source: Company data, Credit Suisse estimates Source: Company data, Credit Suisse estimates

…but returns and margins will still fall short On our base case forecasts for Onshore:

■ EBIT margins top out at around 20%. EBITDA margins should exceed 60% on our forecasts but recall that the D&A charge is around $2.50-2.60/mcf and exceeds operating costs and royalty charges combined.

■ Onshore will continue to consume cash until FY15. It will consume ~$1.4bn this year but will generate cash net of capex of ~$200m in FY15, building to $1.4bn in FY20.

■ EBITDA to net operating assets was a low 5% in FY12 and rises to 15% in FY17. ROIC reaches 3% in FY16 and 4% in FY18 and then is flat. For the Petroleum division, EBIT/net operating assets is forecast decline from current levels of 17% to 15% in FY18. Given Onshore expectations, divisional EBIT margins will moderate from 47% to 37%.

BHP Billiton (BHP.AX / BHP AU) 7 26 April 2013

New broom to sweep clean? Historical legacy poses a problem for BHP management The challenge for new CEO Andrew Mackenzie and new Petroleum President Tim Cutt is to convince shareholders that it makes sense to continue to commit $4bn pa of capex towards the Onshore business. A move which, on paper, will drive down Petroleum returns. We’ve written about this recently and won’t go over old ground except to highlight that:

■ Stripping out the purchase price, Onshore EBITDA to net operating assets increases to 35% in FY18.

■ Onshore ROIC excluding the purchase price improves to 13% over the same timeframe and on the same basis. On a single well basis and on our price deck, we get average IRRs 14% for Fayetteville and Haynesville. For each liquids-rich Eagle Ford well that BHP drills, IRRs are notably higher at more than 25% on average (NPV/well of $3m) and up to 50% ($5m). However, as noted earlier, the liquids-rich Black Hawk makes up only a small part of BHP’s Eagle Ford acreage and more NGL-rich Hawkville fields likely generate IRRs around 15%. Even Fayetteville can generate NPV/well of ~$0.4m given its lower drilling costs. So, despite what will continue to be a low return on the historic Onshore capital base, it is rational for BHP to be investing $4bn pa into the Onshore business. The problem for BHP is one of optics. At 31 December the Onshore assets were in BHP’s books at $25bn and this compares with our DCF-based SOTP of $18bn implying that a further write-down of $7bn is possible. CS believes that US gas prices are capped out at around $4.50/mmbtu and this certainly has an impact on our valuation of the Onshore assets. In May 2012, coal to gas switching reached ~8bcf/day given low US gas prices. US$4/mmbtu average prices this US summer would equal gas to coal switching of greater than 2bcf/day – and CS models lost gas demand of 1.9bcf/day in 2013. The table below shows our Onshore valuation for a range of assumed long run Henry Hub gas prices. The bottom line is that we believe that long run HH gas prices need to sustain over $6/mmbtu for BHP to sustain a carrying value of $25bn.

Figure 10: US Onshore valuation – sensitivity to gas prices HH long run, US$/mmbtu 4.00 4.50 5.00 5.50 6.00 6.50 US Onshore valn, US$m 15,500 17,700 19,900 22,100 24,300 26,500 Source: Credit Suisse estimates If BHP were to take a material write-down on the carrying value of the Onshore assets, both EBIT margins (reduced D&A) and return on assets would improve...If we assume a write-down of $7bn (which would bring the book value into line with our DCF)

■ D&A would fall from $2.6/mcf to $2.1/mcf (on our numbers, new capex incurs ~$1.5/mcf of D&A).

■ Onshore EBIT margins would rise to 27-28%, up from 20%.

■ ROIC would increase to 6% up from 3.5% (we would have to write-down close to $15bn to reach BHP’s cost of capital). There is plenty for the incoming management team to think about!

BHP Billiton (BHP.AX / BHP AU) 8 26 April 2013

Figure 11: BHP Petroleum Onshore summary PRODUCTION SUMMARY FY12 FY13F FY14F FY15F FY16F FY17F FY18F

MMBoE by field Fayetteville 29 30 31 34 37 40 42 Haynesville 34 37 46 52 57 61 64 Eagle Ford 20 32 53 72 89 105 117 Sum 86 99 129 159 183 205 222

Mboe/d (Eagle Ford) 54 87 144 198 245 288 320 Mboe/d (Total) 235 273 354 435 502 562 609

MMBoE by product Condensate 7 11 17 21 24 24 24 Natural Gas 75 81 99 119 136 152 166 NGL 4 7 13 18 24 29 33 Sum 86 99 129 159 183 205 222

SEGMENT FINANCIALS Revenue Fayetteville 508 537 624 783 910 1,030 1,110 Haynesville 589 670 930 1,197 1,386 1,571 1,690 Eagle Ford 1,011 1,620 2,657 3,577 4,119 4,596 4,956 Midstream Revenue 60 65 50 50 50 50 50 Total 2,169 2,893 4,261 5,607 6,465 7,246 7,806

EBITDA Fayetteville 227 250 325 448 543 636 694 Haynesville 253 299 479 674 813 953 1,036 Eagle Ford 556 920 1,626 2,354 2,737 2,991 3,183 Total 1,300 1,505 2,430 3,476 4,093 4,580 4,913

EBIT Fayetteville -90 -72 11 106 177 246 282 Haynesville -194 -190 -126 -14 72 190 234 Eagle Ford 177 288 544 964 1,021 976 1,058 Total -140 -64 428 1,056 1,270 1,412 1,574

Capex Fayetteville 512 234 234 292 293 292 292 Haynesville 761 584 584 584 585 584 584 Eagle Ford 1,235 2,007 2,135 2,347 2,301 2,336 2,336 Other (explo, infrastructure) 400 700 600 600 550 500 500 Total 3,247 4,142 4,170 3,822 3,729 3,712 3,712

FCF ------Fayetteville -377 -26 50 104 198 193 232 Haynesville -508 -284 -105 91 227 369 379 Eagle Ford -679 -1,087 -509 7 437 655 536 Permian Total -1,564 -1,397 -564 202 862 1,217 1,147

Net Operating Assets ($mn) 24,688 25,286 27,647 29,248 30,266 30,892 31,304 Capex ($mn) 3,247 4,142 4,170 3,822 3,729 3,712 3,712

EBIT Margin -6% -2% 10% 19% 20% 19% 20% EBITDA Margin 60% 52% 57% 62% 63% 63% 63% FCF Margin -72% -48% -13% 4% 13% 17% 15% EBITDA to NOA 5% 6% 9% 12% 14% 15% 16% EBITDA to NOA (ex. acquisition) 17% 18% 23% 28% 31% 33% 34% FCF to NOA -6% -6% -2% 1% 3% 4% 4% FCF to NOA (ex. acquisition) -20% -17% -5% 2% 7% 9% 8% ROIC 0% 0% 1% 3% 3% 3% 4% ROIC (ex. acquisition, reduced D&A) 8% 8% 10% 12% 12% 11% 11% Source: Company data, Credit Suisse estimates

BHP Billiton (BHP.AX / BHP AU) 9 26 April 2013

Figure 12: BHP Financials Market data Group Ltd Plc Valuation summary NPV (US$m) US$/share A$/share GB£/share Ticker $US BHP.AX BLT.L Petroleum 47,987 8.9 9.9 6.6 25% Share prices (local) (A$/GB£) 32.54 1,843 Aluminium / alumina 2,604 0.5 0.6 0.4 1% Share price $US equivalent 31.43 33.47 28.43 Base Metals 31,034 5.7 6.5 4.3 16% Plc / Ltd Premium/(discount) 18% -15% Iron ore 72,277 13.4 14.9 9.9 38% Market cap (US$'mn) 169,803 107,489 62,314 Manganese 2,697 0.5 0.6 0.4 1% Market cap (%) 100% 63% 37% Metallurgical Coal 13,822 2.6 3.0 2.0 7% Market cap (local) (GB£ / A$) (million) 104,480 40,380 Diamonds & Specialty 1,338 0.2 0.3 0.2 1% Shares on issue (mn) 5,403 3,211 2,192 Energy Coal 10,427 1.9 2.1 1.4 6% Shares (%) 100% 59% 41% Stainless Steel Materials 4,471 0.8 1.0 0.6 2% Net debt (cash) (US$mn) 37,234 Group & unallocated items 2883.4 0.5 0.5 0.3 2% Enterprise value (EV) ($US'mn) 207,036 Total 189,540 35.1 39.4 26.3 100% FX rate (AUD:USD) & (GBP:USD) 1.03 1.54 Net debt & Provisions 37,234 6.9 6.1 4.1 BHP DCF valuation 161,144 28.2 33.24 22.2 20% Price / NPV 1.11x 0.98x 0.83x Note: the A$/share valuation is calculated using our forecast AUD/USD assumptions Key assumptions FY08 FY09 FY10 FY11 FY12 FY13F FY14F FY15F FY16F FY17F FY18F Exchange rate (AUD / USD) 0.89 0.75 0.88 0.99 1.03 1.03 0.98 0.95 0.93 0.91 0.90 Exchange rate (USD / GBP) 1.99 1.62 1.58 1.55 1.55 1.56 1.55 1.55 1.55 1.55 1.55 Aluminium (US$/lb) 1.18 0.84 0.92 1.09 0.99 0.90 0.91 0.92 0.88 0.88 0.91 Alumina (US$/t) 311 299 309 368 337 333 350 355 380 400 401 Copper (US$/lb) 3.55 2.22 3.03 3.93 3.74 3.55 3.18 2.88 2.83 2.97 3.09 Iron ore, fines (US$/t) 59 75 80 159 85 125 108 94 90 93 95 Iron ore, lump (US$/t) 80 89 94 177 211 133 116 102 98 101 103 Coking coal (US$/t) 150 260 144 247 261 183 175 182 186 189 190 Coking coal semi (US$/t) 108 250 134 235 177 125 123 127 130 132 133 Thermal coal (US$/t) 73 111 77 104 111 87 90 98 101 104 105 Manganese (US$/t) 413 513 314 338 284 300 300 297 284 283 281 Gold (US$/oz) 825 876 1,076 1,371 1,672 1,647 1,538 1,448 1,410 1,390 1,381 Zinc (US$/lb) 1.18 0.63 0.94 1.03 0.92 0.90 0.99 1.13 1.16 1.07 0.99 Oil, Brent 97 84 85 101 106 109 110 104 98 95 95 Gas - Henry Hub ($/Mmbtu) 5.95 4.54 4.89 3.17 3.34 3.85 4.15 4.43 4.70 4.80 Production schedule (attributable) FY08 FY09 FY10 FY11 FY12 FY13F FY14F FY15F FY16F FY17F FY18F Total Petroleum products, Mmboe 130 137 159 159 222 239 265 291 311 329 346 Crude oil & condensate, Mmboe 57 66 84 81 71 74 77 78 77 74 75 Alumina ('000 tonnes) 4,554 4,396 3,841 4,010 4,152 4,870 5,150 5,193 5,193 5,193 5,193 Aluminium ('000 tonnes) 1,298 1,233 1,241 1,246 1,153 1,170 1,205 1,205 1,205 1,205 1,205 Copper ('000 tonnes) 1,369 1,201 1,069 1,134 1,089 1,193 1,321 1,362 1,328 1,275 1,234 Zinc ('000 tonnes) 144 163 198 152 112 111 133 133 133 133 133 Uranium oxide concentrate (tonnes) 4,144 4,007 2,279 4,045 3,885 4,119 4,125 4,125 4,125 4,125 4,125 Nickel ('000 tonnes) 168 173 176 153 158 154 164 164 164 164 164 Iron Ore (kt) (global) (attributable) 112,260 114,415 124,962 134,406 159,478 167,025 187,455 212,284 230,288 243,262 242,258 Iron Ore (kt) (global) (100%) 139,041 141,456 156,150 167,767 197,028 205,903 229,357 257,696 277,358 291,148 290,000 Iron Ore (kt) (WA) (attributable) 112,260 106,097 113,868 122,697 148,055 155,607 175,671 197,784 215,288 228,262 227,258 Iron Ore (kt) (WA) (100%) 122,113 124,820 133,962 144,349 174,182 183,067 205,789 228,696 247,358 261,148 260,000 Manganese ore ('000 tonnes) 6,575 4,475 6,124 7,093 7,931 8,463 8,400 8,400 8,400 8,400 8,400 Manganese alloy ('000 tonnes) 775 513 583 753 602 568 650 750 750 750 750 Metallurgical Coal (Mt, attributable) 35,193 36,416 37,381 32,678 33,230 35,926 40,300 43,900 44,750 44,750 44,750 Energy Coal (Mt) 80,868 68,206 66,131 69,500 71,111 72,363 74,950 76,500 77,300 69,300 69,300 P&L ($US'mn) FY08 FY09 FY10 FY11 FY12 FY13F FY14F FY15F FY16F FY17F FY18F Petroleum 9,547 7,211 8,782 10,737 12,937 13,513 15,758 16,401 16,368 16,496 16,988 Aluminium 5,746 4,151 4,353 5,221 4,766 4,620 4,766 4,757 4,714 4,783 4,903 Base Metals 14,774 7,105 10,409 14,152 11,596 12,490 12,341 11,888 11,550 11,485 11,434 Diamonds and Specialty Products 969 896 1,272 1,517 1,326 539 - - 125 750 1,250 Stainless Steel Materials 5,088 2,355 3,617 3,861 2,993 2,732 2,768 2,911 3,157 3,362 3,448 Iron Ore 9,455 10,048 11,139 20,412 22,601 20,344 19,299 19,145 19,925 21,601 22,123 Manganese 2,912 2,536 2,150 2,423 2,152 2,113 2,217 2,235 2,235 2,235 2,235 Metallurgical Coal 3,941 8,087 6,059 7,573 7,576 5,659 6,593 7,473 7,799 7,948 7,981 Energy Coal 6,560 6,524 4,265 5,507 6,022 5,128 5,334 5,751 5,980 5,641 5,711 Group and inter segment adjustment 481 1,298 752 336 257 125 150 150 200 200 200 BHP Billiton Group revenue 59,473 50,211 52,798 71,739 72,226 67,263 69,226 70,711 72,003 74,451 76,223 Other Income 648 589 528 531 906 2,610 1,000 1,000 1,000 1,000 1,000 Net BHP Billiton revenue 60,121 50,800 53,326 72,270 73,132 69,873 70,226 71,711 73,003 75,451 77,223 Total operating expenses 32,227 28,715 28,813 35,177 39,386 40,895 40,315 40,832 41,205 41,420 41,355 EBITDA - Underlying 27,894 22,085 24,513 37,093 33,746 28,978 29,911 30,879 31,798 34,030 35,868 Depreciation & amortisation -3,612 -3,871 -4,794 -5,113 -6,408 -6,883 -7,777 -8,398 -8,984 -9,436 -9,641 Underlying EBIT 24,282 18,214 19,719 31,980 27,338 22,095 22,133 22,482 22,814 24,594 26,227 Net interest + other -662 -543 -459 -561 -730 -1,066 -1,073 -1,023 -995 -976 -886 Profit before tax 23,620 17,671 19,260 31,419 26,608 21,029 21,061 21,459 21,819 23,618 25,341 Company income taxation -7,680 -6,488 -6,504 -7,309 -7,490 -7,836 -7,371 -7,511 -7,637 -8,266 -8,869 OEI -572 -461 -287 -298 -115 -140 -145 -148 -151 -163 -175 Underlying NPAT 15,368 10,722 12,469 23,812 19,003 13,053 13,544 13,800 14,031 15,189 16,297 Net significant items (post tax) 22 -4,845 253 -164 -3,586 -830 - - - - - Reported NPAT 15,390 5,877 12,722 23,648 15,417 12,223 13,544 13,800 14,031 15,189 16,297 Normalised cash earnings 18,980 14,593 17,263 26,797 23,525 19,935 21,321 22,198 23,016 24,625 25,938 EPS - basic underlying (US cents) 275 193 224 392 319 243 250 254 259 280 300 Dividends Per Share - (US cents) 70 82 87 101 112 117 129 142 157 165 165 Business unit EBIT FY08 FY09 FY10 FY11 FY12 FY13F FY14F FY15F FY16F FY17F FY18F Petroleum 5,489 4,085 4,573 6,330 6,348 6,325 7,007 7,029 6,384 6,087 6,351 Aluminium 1,465 192 406 266 -291 -178 -5 31 3 59 121 Base Metals 7,989 1,292 4,632 6,790 3,965 4,144 3,830 3,967 3,632 3,556 3,468 Diamonds and Specialty Products 189 145 485 587 199 -45 - - 82 494 824 Stainless Steel Materials 1,275 -854 668 588 32 -95 62 205 451 656 742 Iron Ore 4,631 6,229 6,001 13,328 14,201 11,401 9,695 8,777 8,813 9,940 10,467 Manganese 1,644 1,349 712 697 235 364 371 369 369 372 377 Metallurgical Coal 937 4,711 2,053 2,670 1,570 -50 749 1,159 1,928 2,216 2,597 Energy Coal 1,057 1,460 730 1,129 1,227 458 726 1,245 1,451 1,514 1,578 Group and unallocated items -394 -395 -541 -405 -148 -229 -300 -300 -300 -300 -300 Total BHP Billiton Group 24,282 18,214 19,719 31,980 27,338 22,095 22,133 22,482 22,814 24,594 26,227 Source: Company data, Credit Suisse estimates

BHP Billiton (BHP.AX / BHP AU) 10 26 April 2013

Figure 13: BHP Financials Cashflows ($US'mn) FY08 FY09 FY10 FY11 FY12 FY13F FY14F FY15F FY16F FY17F Operating cashflows 18,159 18,863 17,920 31,061 24,384 19,806 20,860 22,396 23,358 25,152 Capex - sustaining -1,832 -2,028 -1,703 -2,244 -2,588 -3,205 -3,984 -4,175 -4,356 -4,545 Free cash flow (sustaining) 16,327 16,835 16,217 28,817 21,796 16,601 16,876 18,221 19,003 20,607 FCF per share 2.92 3.03 2.91 5.23 4.09 3.06 3.11 3.36 3.50 3.80 Capex - exploration -1,350 -1,243 -1,333 -1,240 -2,452 -1,342 -1,415 -1,468 -1,375 -1,423 Capex - growth projects -6,097 -7,308 -8,063 -9,366 -17,735 -17,255 -11,525 -8,712 -9,077 -7,673 Free cash flow (all capex) 8,883 8,287 6,824 18,216 1,613 -1,993 3,939 8,045 8,554 11,515 FCF per share 1.59 1.49 1.23 3.31 0.30 -0.37 0.73 1.48 1.58 2.12 Other investing cashflows -1,135 -1,715 -1,249 -5,835 -11,713 2,470 -1,415 -1,468 -1,375 -1,423 Dividend payments -3,135 -4,563 -4,618 -5,054 -5,877 -6,145 -6,629 -7,308 -8,058 -8,753 Other financing cashflows -2,861 4,621 640 -9,733 10,834 7,858 5,995 1,447 -946 401 Net increase in cash 1,754 6,632 1,598 -2,402 -5,143 2,190 1,891 717 -1,823 1,741 Cash at end of the year 4,173 10,831 12,455 10,080 4,881 7,088 8,980 9,697 7,874 9,616 Total capex spend -9,279 -10,579 -11,099 -12,850 -22,775 -21,802 -16,924 -14,355 -14,807 -13,641 Balance Sheet ($US'm) FY08 FY09 FY10 FY11 FY12 FY13F FY14F FY15F FY16F FY17F Cash 4,237 10,833 12,456 10,084 4,781 7,088 8,980 9,697 7,874 9,616 Receivables 9,801 5,153 6,543 8,197 7,704 7,719 7,719 7,719 7,719 7,719 Inventories 4,971 4,821 5,334 6,154 6,233 6,571 6,571 6,571 6,571 6,571 Plant & equipment 47,332 49,032 55,576 68,468 95,247 103,049 112,195 118,152 123,975 128,180 Deferred tax assets 3,486 3,910 4,053 3,993 4,525 5,347 5,347 5,347 5,347 5,347 Intangibles 183 263 317 534 4,742 5,207 5,207 5,207 5,207 5,207 Other assets 5,879 4,758 4,573 5,461 6,041 6,215 6,215 6,215 6,215 6,215 Assets 75,889 78,770 88,852 102,891 129,273 141,196 152,234 158,908 162,909 168,855 Payables 6,774 5,619 6,467 9,718 12,024 10,740 10,740 10,740 10,740 10,740 Provisions 1,596 1,887 1,899 2,256 2,784 2,505 2,505 2,505 2,505 2,505 Tax liabilities 2,022 1,931 1,685 3,693 2,811 3,680 3,073 3,123 3,315 3,679 LT Borrowings 9,234 15,325 13,573 12,388 24,799 31,835 36,435 36,435 34,135 33,135 Other liabilities 17,220 13,297 15,899 17,081 19,770 19,283 19,283 19,283 19,283 19,283 Liabilities 36,846 38,059 39,523 45,136 62,188 68,043 72,036 72,086 69,978 69,342 Net Assets 39,043 40,711 49,329 57,755 67,085 73,153 80,198 86,822 92,930 99,513 OEI 708 757 804 993 1,215 1,272 1,317 1,366 1,416 1,479

Valuation metrics FY08 FY09 FY10 FY11 FY12 FY13F FY14F FY15F FY16F FY17F Underlying earnings (US$bn) 15,368 10,722 12,469 23,812 19,003 13,053 13,544 13,800 14,031 15,189 Average shares on issue (basic, millions) 5,590 5,565 5,565 5,511 5,323 5,428 5,428 5,428 5,428 5,428 Reported EPS - diluted (US cents) 275 105 227 427 288 224 249 253 258 279 Underlying EPS (diluted) (US cents) 274 192 223 391 318 240 249 253 258 279 EPS growth 20% -30% 16% 76% -19% -25% 4% 2% 2% 8% Cash EPS (diluted) 339 261 309 484 440 366 392 408 423 452 PE Ltd 12.2x 17.5x 15.0x 8.6x 10.5x 14.0x 13.5x 13.2x 13.0x 12.0x PE Plc 10.4x 14.8x 12.8x 7.3x 9.0x 11.9x 11.4x 11.2x 11.0x 10.2x PE Ltd (CS FX forward curve) 10.6x 12.7x 12.9x 8.2x 10.6x 14.0x 12.8x 12.2x 11.7x 10.6x PE Plc (CS FX forward curve) 13.4x 15.6x 13.1x 7.3x 9.0x 12.0x 11.5x 11.3x 11.1x 10.2x Price/cash earnings - Ltd 9.9x 12.8x 10.8x 6.9x 7.6x 9.1x 8.5x 8.2x 7.9x 7.4x Price/cash earnings - Plc 8.4x 10.9x 9.2x 5.9x 6.5x 9.1x 7.3x 7.0x 6.7x 6.3x Book value (US$/share) 6.9 7.2 8.7 10.3 12.4 13.2 14.5 15.7 16.9 18.1 P / NAV (P/B) - Ltd 4.9x 4.7x 3.8x 3.2x 2.7x 2.5x 2.3x 2.1x 2.0x 1.9x P / NAV (P/B) - Plc 4.1x 4.0x 3.3x 2.8x 2.3x 2.1x 2.0x 1.8x 1.7x 1.6x DPS, ordinary (USD) 70.0 82.0 87.0 101.0 112.0 116.9 128.8 142.0 156.6 165.3 DPS, ordinary (AUD spot) 68.0 79.7 84.6 98.2 108.9 113.6 125.2 138.1 152.2 160.6 Payout ratio, ordinary 26% 43% 39% 26% 35% 49% 52% 56% 61% 59% Div Yield Ltd 2.1% 2.4% 2.6% 3.0% 3.3% 3.5% 3.8% 4.2% 4.7% 4.9% Franking 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% Dividend yield (gross) (Ltd) 3.0% 3.5% 3.7% 4.3% 4.8% 5.0% 5.5% 6.1% 6.7% 7.1% EV (fixed) / EBITDA 7.7x 9.7x 8.6x 5.7x 6.2x 7.2x 7.0x 6.8x 6.6x 6.1x EV/EBITDA 6.6x 8.3x 7.2x 4.8x 5.8x 6.9x 6.8x 6.5x 6.3x 5.8x EBIT/Total Assets 35.4% 23.6% 23.5% 33.4% 23.6% 16.3% 15.1% 14.5% 14.2% 14.8% ROIC (%) 33% 15% 20% 34% 19% 12% 12% 11% 11% 12% ROE - underlying NPAT (%) 45% 27% 28% 44% 30% 19% 18% 17% 16% 16% Gearing FY08 FY09 FY10 FY11 FY12 FY13F FY14F FY15F FY16F FY17F Net Debt (net cash) 8,458 5,586 3,308 5,823 23,549 28,397 31,105 30,388 29,911 27,169 Net Debt / (Net Debt + Equity) (%) 18% 12% 6% 9% 26% 28% 28% 26% 24% 22% Net Debt / Equity (%) 22% 14% 7% 10% 35% 39% 39% 35% 32% 27% Interest cover (x) (EBITDA) 42 41 53 66 46 27 28 30 32 35 Margins FY08 FY09 FY10 FY11 FY12 FY13F FY14F FY15F FY16F FY17F EBITDA margin 46% 43% 46% 51% 46% 41% 43% 43% 44% 45% EBIT margin 40% 36% 37% 44% 37% 32% 32% 31% 31% 33% NPAT margin 26% 21% 23% 33% 26% 19% 19% 19% 19% 20% Tax rate 30% 52% 31% 21% 31% 37% 35% 35% 35% 35% Source: Company data, Credit Suisse estimates

BHP Billiton (BHP.AX / BHP AU) 11 26 April 2013

Figure 14: BHP SoTP Valuation NPV (US$mn) US$/sh NPV (A$mn) A$/sh GBP/sh % Bass Strait 6,022 1.11 6,417 1.19 0.79 3% North West Shelf 8,349 1.55 9,376 1.74 1.16 4% Macedon 1,109 0.21 1,247 0.23 0.15 1% Atlantis 2,332 0.43 2,332 0.43 0.29 1% Shenzi 5,167 0.96 5,747 1.06 0.71 3% Mad Dog 3,267 0.60 3,765 0.70 0.46 2% ROD & Ohanet 1,288 0.24 1,431 0.26 0.18 1% Liverpool Bay & Bruce/Keith 187 0.03 202 0.04 0.02 0% US Onshore 17,731 3.28 20,273 3.75 2.50 10% Other 2,534 0.47 2,803 0.52 0.35 1% PETROLEUM 47,987 8.9 53,593 9.9 6.6 25% ALUMINIUM 2,604 0.5 3,477 0.6 0.4 2% Western Australia Iron Ore 66,790 12.4 74,789 13.8 9.2 35% Samarco 5,487 1.0 5,553 1.0 0.7 3% IRON ORE 72,277 13.4 80,342 14.9 9.9 38% Escondida 9,611 1.8 11,035 2.0 1.4 5% Pampa Norte (Spence & Cerro Colorado) 5,819 1.1 6,496 1.2 0.8 3% Other America (Antimina + Pinto Valley) 5,443 1.0 6,083 1.1 0.8 3% Cannington 6,470 1.2 7,358 1.4 0.9 3% Olympic Dam 3,691 0.7 4,155 0.8 0.5 2% BASE METALS 31,034 5.7 35,126 6.5 4.3 17% South Africa Coal 1,752 0.3 1,961 0.4 0.2 1% New Mexico 142 0.0 155 0.0 0.0 0% Hunter Valley 4,125 0.8 4,712 0.9 0.6 2% Colombia 4,408 0.8 4,568 0.8 0.6 2% ENERGY COAL 10,427 1.9 11,395 2.1 1.4 5% DIAMONDS AND SPECIALTY PRODUCTS 1,338 0.2 1,744 0.3 0.2 1% Potash 1,338 0.2 1,744 0.3 0.2 1% MANGANESE 2,697 0.5 3,239 0.6 0.4 2% Queensland Coal 10,610 2.0 12,352 2.3 1.5 6% Illawarra Coal 3,212 0.6 3,797 0.7 0.5 2% METALLURGICAL COAL 13,822 2.6 16,148 3.0 2.0 8% Nickel West 1,722 0.3 2,006 0.4 0.2 1% Cerro Matoso 2,749 0.5 3,141 0.6 0.4 1% STAINLESS STEEL MATERIALS 4,471 0.8 5,147 1.0 0.6 2% Exploration/Development Projects 4,500 0.8 4,374 0.8 0.5 2% Other (incl. exploration/OEI) -1,617 -0.3 -1,833 -0.3 -0.2 -1% Total operations 189,540 35.1 212,751 39.4 26.3 100% Net debt 28,397 5.3 28,397 5.1 3.4 Provisions 8,837 1.6 8,590 1.0 0.7 Equity value 161,144 29.8 184,354 33.2 22.2 Source: Company data, Credit Suisse estimates

BHP Billiton (BHP.AX / BHP AU) 12 26 April 2013

Companies Mentioned (Price as of 26-Apr-2013) BHP Billiton (BHP.AX, A$32.54, NEUTRAL, TP A$35.0) BHP Billiton (BLT.L, 1842.5p)

Disclosure Appendix

Important Global Disclosures Paul McTaggart and James Redfern, each certify, with respect to the companies or securities that the individual analyzes, that (1) the views expressed in this report accurately reflect his or her personal views about all of the subject companies and securities and (2) no part of his or her compensation was, is or will be directly or indirectly related to the specific recommendations or views expressed in this report.

Price and Rating History for BHP Billiton (BHP.AX)

BHP.AX Closing Price Target Price Date (A$) (A$) Rating 23-Jun-10 39.14 45.00 O 20-Jul-10 38.30 45.00 N 21-Oct-10 41.22 47.50 11-Jan-11 44.61 52.50 10-Mar-11 44.63 55.00 13-Apr-11 48.58 58.00 O 03-Aug-11 40.15 47.00 N 04-Oct-11 33.86 45.00 O 11-Jul-12 31.05 35.00 N 01-Nov-12 33.82 36.00 OUTPERFORM NEUTRAL 07-Jan-13 37.81 40.00 03-Apr-13 32.23 35.00 * Asterisk signifies initiation or assumption of coverage.

Price and Rating History for BHP Billiton (BLT.L)

BLT.L Closing Price Target Price Date (p) (p) Rating 22-Jun-10 1988.00 2300.00 O 19-Jul-10 1816.50 2300.00 N 20-Oct-10 2192.50 2500.00 07-Jan-11 2492.50 3000.00 10-Mar-11 2300.00 3150.00 11-Apr-11 2631.50 3300.00 O 02-Aug-11 2214.50 3160.00 N 04-Oct-11 1667.00 2800.00 O 13-Apr-12 1889.00 2460.00 11-Jul-12 1811.00 2100.00 N OUTPERFORM NEUTRAL 07-Jan-13 2169.00 2400.00 03-Apr-13 1900.00 2250.00 * Asterisk signifies initiation or assumption of coverage. The analyst(s) responsible for preparing this research report received Compensation that is based upon various factors including Credit Suisse's total revenues, a portion of which are generated by Credit Suisse's investment banking activities As of December 10, 2012 Analysts’ stock rating are defined as follows: Outperform (O) : The stock’s total return is expected to outperform the relevant benchmark*over the next 12 months. Neutral (N) : The stock’s total return is expected to be in line with the relevant benchmark* over the next 12 months. Underperform (U) : The stock’s total return is expected to underperform the relevant benchmark* over the next 12 months. *Relevant benchmark by region: As of 10th December 2012, Japanese ratings are based on a stock’s total return relative to the analyst's coverage universe which consists of all companies covered by the analyst within the relevant sector, with Outperforms representing the most attractive, Neutrals the less attractive, and Underperforms the least attractive investment opportunities. As of 2nd October 2012, U.S. and Canadian as well as European ratings are ba sed on a stock’s total return relative to the analyst's coverage universe which consists of all companies covered by the analyst within the relevant sector, with Outperforms representing the most attractive, Neutrals the less attractive, and Underperforms the least attractive investment opportunities. For Latin Ame rican and non-Japan Asia stocks, ratings

BHP Billiton (BHP.AX / BHP AU) 13 26 April 2013 are based on a stock’s total return relative to the average total return of the relevant country or regional benchmark; Australia, New Zealand are, and prior to 2nd October 2012 U.S. and Canadian ratings were based on (1) a stock’s absolute total return potential to its current share price and (2) the relative attractiveness of a stock’s total return potential within an analyst’s coverage universe. For Australian and New Zealand stocks, 12-month rolling yield is incorporated in the absolute total return calculation and a 15% and a 7.5% threshold replace the 10-15% level in the Outperform and Underperform stock rating definitions, respectively. The 15% and 7.5% thresholds replace the +10-15% and -10-15% levels in the Neutral stock rating definition, respectively. Prior to 10th December 2012, Japanese ratings were based on a stock’s total return relative to the average total return of the relevant country or regional benchmark. Restricted (R) : In certain circumstances, Credit Suisse policy and/or applicable law and regulations preclude certain types of communications, including an investment recommendation, during the course of Credit Suisse's engagement in an investment banking transaction and in certain other circumstances.

Volatility Indicator [V] : A stock is defined as volatile if the stock price has moved up or down by 20% or more in a month in at least 8 of the past 24 months or the analyst expects significant volatility going forward.

Analysts’ sector weightings are distinct from analysts’ stock ratings and are based on the analyst’s expectations for the fundamentals and/or valuation of the sector* relative to the group’s historic fundamentals and/or valuation: Overweight : The analyst’s expectation for the sector’s fundamentals and/or valuation is favorable over the next 12 months. Market Weight : The analyst’s expectation for the sector’s fundamentals and/or valuation is neutral over the next 12 months. Underweight : The analyst’s expectation for the sector’s fundamentals and/or valuation is cautious over the next 12 months. *An analyst’s coverage sector consists of all companies covered by the analyst within the relevant sector. An analyst may cover multiple sectors.

Credit Suisse's distribution of stock ratings (and banking clients) is:

Global Ratings Distribution Rating Versus universe (%) Of which banking clients (%) Outperform/Buy* 43% (54% banking clients) Neutral/Hold* 39% (47% banking clients) Underperform/Sell* 15% (39% banking clients) Restricted 3% *For purposes of the NYSE and NASD ratings distribution disclosure requirements, our stock ratings of Outperform, Neutral, and Underperform most closely correspond to Buy, Hold, and Sell, respectively; however, the meanings are not the same, as our stock ratings are determined on a relative basis. (Please refer to definitions above.) An investor's decision to buy or sell a security should be based on investment objectives, current holdings, and o ther individual factors.

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Price Target: (12 months) for BHP Billiton (BHP.AX) Method: We set our target price of A$35/(GBp2250) in line with our discounted cash flow (DCF) sum-of-parts (SOP) valuation. Weighted average cost of capital (WACC) of 9%. We model (principally) in USD and over life-of-mine for BHP's long life operations. Valuation includes our assessment of the Australian Government's proposed new mining taxes. Risk: Risks to our BHP price targets of A$35/GBp2250 include commodity price risk (especially Chinese growth expectations), mining operational risk and regulatory risk (taxes and royalty rates, and possible future carbon taxes).

Please refer to the firm's disclosure website at www.credit-suisse.com/researchdisclosures for the definitions of abbreviations typically used in the target price method and risk sections.

See the Companies Mentioned section for full company names The subject company (BHP.AX, BLT.L) currently is, or was during the 12-month period preceding the date of distribution of this report, a client of Credit Suisse. Credit Suisse provided non-investment banking services to the subject company (BHP.AX, BLT.L) within the past 12 months Credit Suisse expects to receive or intends to seek investment banking related compensation from the subject company (BHP.AX, BLT.L) within the next 3 months. Credit Suisse has received compensation for products and services other than investment banking services from the subject company (BHP.AX, BLT.L) within the past 12 months

BHP Billiton (BHP.AX / BHP AU) 14 26 April 2013

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BHP Billiton (BHP.AX / BHP AU) 15 26 April 2013

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