The Rising Influence of Rising Affluence

[DewDiligence]

BHP Is Prowling for Oil & Gas M&A

[Although oil & gas comprised only 14% of BHP’s operations by revenue in FY2009 (#msg-40564651), BHP produces about 500K boe/d, which puts it on a par with such companies as HES.]

http://www.reuters.com/article/idAFSGE64N1KP20100524

›By Fayen Wong

PERTH, May 24 (Reuters) - Global miner BHP Billiton Ltd/Plc <BHP.N> <BBL.N> <BHP.AX> <BLT.L> wants to take advantage of the current market weakness and is looking worldwide for acquisition opportunities to grow its business, a senior company official said on Monday.

BHP also said the recent giant oil spill in the Gulf of Mexico has brought some delays to its projects and could hit its production growth forecast of 10 percent for the year ending June 2010, and estimates of 8-10 percent next year.

…There has been persistent speculation that BHP could launch a bid for smaller rival Woodside Petroleum Ltd <WPL.AX>, as both firms are already partners in some key projects and have similar exploration strategies in several regions, including the Gulf of Mexico in the United States and western Australia.

On new projects, BHP said it was looking at development options for the massive Scarborough and Thebe gas fields off western Australia, adding that the building of a liquefied natural gas (LNG) export facility could cost between $15-$20 billion.

Yeager said BHP and partner ExxonMobil Corp <XOM.N> plan to start front-end engineering and development for the Scarborough field, estimated to hold about 8 trillion cubic feet of gas, in fiscal 2011, and that the venture was also considering processing the gas at somebody else's LNG facility.

The firm also plans to sanction the Macedon domestic gas project off Western Australia in the middle of this year, with first gas expected in 2013.

BHP's petroleum business accounts for about 25 percent of its total earnings and is the company's highest-margin business. [This is wrong, as can be seen from the table in #msg-40564651; in FY2009, oil & gas produced 14% of BHP’s revenue and 22% of its operating income. Note that margins in each of BHP’s business segment vary widely from year to year, so the above %’s could be very different in FY2010.]

COMMITTED TO GULF OF MEXICO

Yeager said it has diverted two of the firm's four drilling rigs in the Gulf of Mexico to BP Plc to help contain the oil spill from the Macondo well, which would lead to delays in its own drilling and production schedule at the Atlantis and Mad Dog fields.

Despite current uncertainties in the Gulf, BHP said it remains committed to the region and believes there were further growth opportunities.

"We are confident that our long-term strategy will not be impacted. If anything, we will look to see if there are any opportunities to see what else we can do," he said.

BHP's giant Atlantis oil field, which is operated by BP, could be idled if U.S. legislators win their fight to investigate safety concerns at the platform. BHP holds a 44 percent interest in the field, while BP holds the rest.

Yeager also said BHP still sees returns on its petroleum operations in Australia and the Gulf of Mexico in the United States as competitive.

"Right now, we continue to see Western Australia and the Gulf of Mexico as having competitive rates of return in the oil and gas business," Yeager said.‹