UPDATE 2-BHP on prowl for acquisitions; Gulf woes may weigh

* Seeks to utilize strong balance sheet, mkt weakness for
M&A

* Oil spill in U.S. Gulf of Mexico could affect output
growth

* Building of LNG plant for Scarborough to cost $15-20bln

* Returns in petroleum business in Australia still
attractive (Recasts; adds details of plans)

By Fayen Wong

PERTH, May 24 (BestGrowthStock) – Global miner BHP Billiton Ltd/Plc
(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 10, and estimates of 8-10 percent next year.

“We have not spent much time externally. But we are now
spending more time externally,” BHP’s petroleum president
Michael Yeager told reporters. “As we grow our capabilities …
this powerful balance sheet that we have is an enormous tool.”

“And when you combine our health and strength, with some
slowness in the market area, it is something that we do not
want to let pass us by,” he said.

Yeager would not say if BHP was looking at investment
opportunities for its petroleum business or other commodities,
but noted that the petroleum unit needs to reinvigorate its
exploration programme.

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.

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 (BP.L: ) 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. [ID:nSPILL]

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.

Stock Market Report

(Additional reporting by Sonali Paul; Editing by Ed Davies and
Muralikumar Anantharaman)

UPDATE 2-BHP on prowl for acquisitions; Gulf woes may weigh