BHP Billiton head Andrew Mackenzie has flagged higher dividends and a sharp boost to production despite falls in the company's key iron ore and petroleum divisions in the last quarter.
Shares in the global resources giant fell by almost two per cent on Wednesday morning after it said total petroleum production fell to 57.7 million barrels of oil or equivalent (mmboe) in the second quarter of the 2013/14 financial year, down from 62.7 mmboe in the first quarter.
Over the first half of the financial year, petroleum production fell one per cent, but full year guidance remains unchanged at 250 million barrels.
The company's Pilbara iron ore production of 53.64 million tonnes in the December quarter was down slightly from 54.26 million tonnes in the previous quarter, after the key iron ore export hub of Port Hedland shut down for several days due to a cyclone.
Despite the quarterly fall, the world's biggest mining company is sticking to its 2014 financial year production guidance of 192 million tonnes for iron ore - from which BHP makes the majority of its earnings.
IG analyst Evan Lucas said he was slightly disappointed with BHP's numbers, particularly with the petroleum division, which has invested heavily in US shale.
"The fact that you saw a decrease across the quarter, across the half and compared to Q1 - that's disappointing considering how much time they've put into it and it means they've almost got no room to move in terms of seasonality or weather issues to reach their guidance," he said.
Overall production across the group was up 10 per cent over the six months to December, compared to a year ago.
Chief executive Andrew Mackenzie predicts a further 16 per cent increase in production for the two years to the end of the 2014/2015 financial year, saying the company would maintain strict financial discipline and increase internal competition for capital.
"This strategy leaves us well positioned to deliver a substantial increase in free cash flow and higher returns to shareholders," Mr Mackenzie said.
The resources giant expects total capital expenditure to run to more than $16.1 billion in the 2013/14 financial year, as its 10 remaining projects go to plan.
Despite a second quarter production fall, BHP said it produced a record 98 million tonnes of iron ore in the second half of 2013, thanks to productivity gains and the opening of new mines.
"Iron ore was good. Although it didn't meet estimates it was basically in line with the record print they had in the first quarter and they were also affected by weather," Mr Lucas said.
The company also reaffirmed full year production guidance of 41 tonnes of metallurgical coal and 73 million tonnes of energy coal following December quarter increases in both commodities.
BHP shares recovered some ground in afternoon trade to close 32 cents lower at $37.63, after earlier dipping as low as $37.22.
Analysts said the share price fall could also be partly attributed to a lower iron ore price, with the steel making ingredient falling to a seven month low of $US123.20 per tonne on Wednesday, down from $US124.80 on Tuesday.
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