February 15, 2011 / 10:45 AM / in 7 years

CORRECTED - CORRECTED-BHP investors pin hopes on expanded share buyback

 (Removes incorrect reference to timing of results in story
summary)
 * Consensus points to H1 attributable profit of $10.3 bln
 * BHP can return $10 bln-$25 bln via shr buyback/special
   div-analysts
 * BHP may be interested in an oil and gas company
 * Shares up 9 percent in 2 weeks
 By Sonali Paul
 MELBOURNE, Feb 15 (Reuters) - Top global miner BHP Billiton
BHP.AX is expected to nearly double its first-half profit to
a record, with investors focused on its strategy for its
bulging cash pile as iron ore, copper and oil prices soar.
 Shareholders have been clamouring for the company to expand
its ongoing $4.2 billion share buyback, with only a quarter of
that completed so far, after it faltered on three major deals
over the past three years.
 BHP remains undaunted in its takeover ambitions, despite
having been forced to ditch its $39 billion bid for top global
fertiliser maker Potash Corp POT.TO, an iron ore joint
venture with Rio Tinto RIO.AX RIO.L and a full takeover of
Rio Tinto in the face of government and regulatory resistance.
 So BHP may look to preserve cash as it looks to pounce on
an oil and gas target, with speculation that it would be
interested in Anadarko Petroleum APC.N, Apache Petroleum
APA.N or Woodside Petroleum WPL.AX. [ID:nL3E6NV01K]
 Even with acquisitions and plans to spend $15 billion a
year on projects, BHP has the capacity to return anywhere
between $10 billion and $25 billion to shareholders through
share buybacks or special dividends, analysts estimate.
 On Tuesday, speculation centred around $10 billion.
 "They've got the capacity. It's whether that's what they
want to do," said James Bruce, portfolio manager at Perpetual
Investments, one of BHP's top ten Australian shareholders.
 BHP is expected to report attributable profit before
one-offs of $10.3 billion for July-December, based on an
average of 14 analysts' forecasts, up from $5.7 billion a year
ago.
 That would follow Rio Tinto's bumper second-half profit of
$8.22 billion last week and a promise to return $5 billion to
shareholders over the next two years, starting off with an
on-market buyback of its UK listed shares. [ID:nL3E7DA0K8]
 For StarMine comparative data:
 link.reuters.com/tep97r
 BHP's shares are considered cheap at the moment, trading on
a forward earnings multiple of just 11.9 even after a 9 percent
share price rally to a near 33-month high ahead of the results.
 "We think that BHP is attractively priced for investors,"
Bruce said.
 BHP shares closed up 0.2 percent at A$47.36 ahead of the
results announcement, due before the Australian market opens on
Wednesday.
 Australian fund managers looking for an off-market buyback
of BHP's Australian shares are the least likely to get their
way, as it makes more sense for BHP to buy back its UK listed
shares, which are cheaper, on market.
 Analysts expect a dividend of around 49 cents a share, up
from 42 cents a year ago.
 Smaller rival Xstrata XTA.L set the pace last week
topping forecasts with an 86 percent jump in full-year profit
and a dividend that was nearly double market expectations.
 (Editing by Anshuman Daga)

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