Five years after BHP Billiton plunged $20bn into the US shale revolution, the wait goes on for shareholders.

Even if oil prices rally by one-third the fields will not generate significant free cash flow until the turn of the decade, the mining company cum oil producer revealed at investor briefings last week.

Yet the head of BHP’s petroleum business says the company remains committed to its shale assets, which he believes can outstrip its conventional oilfields and plug a supply gap that it sees emerging from the industry-wide investment drought brought about by the collapse in crude prices since mid-2014.

“We admit straight away that we didn’t get the timing right [of the shale deals],” says Steve Pastor in an interview in London. “But what we did pick up were fantastic assets.”

BHP’s acquisition of two US shale producers in 2011 was followed by $17bn of investment, beefing up an oil business that has long set the world’s most valuable mining company apart from its peers. About one-third of BHP’s group earnings before interest, tax, depreciation and amortisation have come from petroleum over the past five years.

The timing of its shale bet proved ill-judged. Following a savage market downturn that has seen oil prices more than halve, BHP has racked up $12bn of impairments and the US shale business is now valued at just $12.6bn. Output is expected to fall by a quarter this year, the consequence of a much reduced drilling programme.

BHP’s oil exposure has been a reason for the company’s underperformance against peers over the past year and a half. But as China’s economic growth slows and the industry expects sluggish long-term demand for commodities such as coal and iron ore, BHP’s petroleum business is arguably more important than ever.

At last week’s investor briefings BHP attempted to reset expectations for its oil business, stressing a commitment to the company’s US onshore position and a belief that the crude market will come back into balance before its other commodities.

“When you think about what we have today … [oil] is one of the most attractive growth levers and options across the group portfolio,” says Mr Pastor.

Even before its venture into US shale, BHP was unusual among miners in having a significant oil business, based largely on deepwater fields around Australia and the Gulf of Mexico.

Today BHP says it is a top 10 producer of both US shale gas and oil and ranks fourth by output in the Gulf of Mexico. In terms of production — some 660,000 barrels of oil equivalent per day — BHP’s oil business bears comparison with that of Chesapeake Energy and Apache, according to Wood Mackenzie data.

Mr Pastor addressed investors after a timely lift from Opec, the oil producers’ cartel, which last month agreed to cut output for the first time since the financial crisis — a surprise that helped to propel BHP’s share price to a 12-month high.

But one of analysts’ main conclusions from a welter of information on BHP’s oil business this month is that its US onshore assets — in well-known shale formations such as the Permian basin and Eagle Ford in Texas — may not be sufficiently cash-generative for a while longer.

“The challenge for the portfolio remains the lack of free cash flow,” say analysts at Deutsche Bank.

BHP’s projections imply that the US onshore business is unlikely to contribute positive free cash flow until 2020 if today’s oil and gas prices persist, say analysts at JPMorgan. The US oil benchmark West Texas Intermediate — today at about $50 per barrel — would have to rise to $70 “to generate sustainable, positive pre-tax free cash flow”, add the analysts.

BHP says the US onshore business should at worst be broadly cash flow neutral, adding that earnings from other commodities mean the company can be patient with shale, where it is cutting the cost of building wells.

Particularly in the Permian basin, BHP thinks it could lift production from 30,000 boe/d to 150,000 boe/d in five years, making it the largest part of its petroleum portfolio.

Indeed, BHP is relying on its US onshore business to plug the production gap expected from declining conventional fields.

One intended new conventional project — Mad Dog 2 in the Gulf of Mexico, where BHP has a 24 per cent share alongside operator BP — will reach a final investment decision within six months.

Analysts at Credit Suisse highlight how Mad Dog 2 will only produce from 2022 or later. “What we think is missing is a conventional oil asset that could fill the gap before Mad Dog 2 … a post-discovery, pre-production acquisition in deep water oil would be ideal to fill the asset gap but probably unlikely,” they say.

Mr Pastor does not rule out deals. “It has to be at the right price but also consider fiscal terms and political risk,” he says. “And it has to compete with any other opportunity for capital in BHP.”