BBL BHP Group Plc

NEW YORK—Energy and mining giant BHP Billiton Ltd. has started tapping into its backlog of drilled oil wells in Texas and could profitably drill new wells if oil prices hold above $50 a barrel, Chief Executive Andrew Mackenzie said.

The move to bring new production online is the latest sign that the recent rally in oil prices from less than $30 a barrel to above $50 could encourage U.S. producers to keep output high, which could keep a global oversupply of crude from easing.

BHP is bringing online "some" of its drilled but uncompleted wells in the Black Hawk field in South Texas, Mr. Mackenzie said in an interview on Tuesday.

The company also has about 1,400 wells that would be profitable with prices below $60 a barrel, the company said in a presentation in May.

But "we're pretty gun-shy about what we want to invest," Mr. Mackenzie said, noting that the company is more focused on improving its balance sheet and paying its dividend. BHP slashed its dividend in February.

Booming U.S. shale-oil production was a key driver behind the monthslong drop in oil prices that started in mid-2014. U.S. oil prices were down 1.1% on Tuesday at $48.81 a barrel on the New York Mercantile Exchange.

Oil producers, including BHP, slashed spending on new drilling in response to falling oil prices. But U.S. oil output has declined more slowly than most investors expected, as producers were able to cut costs and increase efficiency.

Many producers in the past two years opted to leave thousands of wells untapped and wait until prices improved to bring them online. As prices have climbed in recent months, some companies have talked about plans to bring those wells online. In addition, the number of rigs drilling for oil in the U.S. has increased for three straight weeks, according to Baker Hughes Inc.

BHP has struggled in the U.S. oil patch and has announced several write-downs against its U.S. onshore energy business. When BHP acquired U.S. shale assets in 2011, "we were probably moving faster than we had the sufficient geological knowledge to focus on the sweet spots," Mr. Mackenzie said.

Mr. Mackenzie also tamped down talk of acquisitions, saying that BHP is more likely to succeed developing its own assets than buying others.

"You could see it's possible we've got to a point where (commodity) prices have recovered and we've done no deals. And I won't feel I'm at any loss for having done that," he said. He would feel chagrin, he added, if a competitor ending up getting a good deal.

Timothy Puko contributed to this article.

Write to Nicole Friedman at nicole.friedman@wsj.com

(END) Dow Jones Newswires

June 21, 2016 16:05 ET (20:05 GMT)

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