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Nov
10
John Murphy
BHP Billiton Rises with Big Oil Transformation
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BHP Billiton (NYSE: BHP) is the world’s largest natural resources company, rich in holdings such as as coal, copper, natural gas, and others.

But BHP Billiton is now transforming itself, seeking to increase oil production to join Big Oil firms such as Chevron (NYSE: CVX) and ExxonMobil (NYSE: XOM).

To finance that transition, BHP Billiton is selling off assets.  Wall Street approves of the move as BPH Billiton is up for the last week and month of market action.  That is in stark contrast to the share price for BHP Billiton falling for the previous quarter, six months, and year of trading (chart below).  For 2014, BHP Billiton is down by just over 9 percent.

Investors should be bullish about BHP Billiton for the long term, however.

The stock price of BHP Billiton is down along with global economic growth.  BHP Billiton needs for China, India, and others nations to be growing; with the economies consuming industrial metals such as coal, copper, and other commodities.  Eventually strong economic growth will return to China, India, and other emerging market countries.

That will to do much to take the stock price of BHP Billiton higher.

So will its moving more into oil production.  Oil prices are down now due to a weak demand.  That is another factor of tepid global growth.  This can be shown by the shares prices for ExxonMobil and Chevron, among other oil and natural gas firms.   It is a good time to be gobbling up oil properties as prices are low.

But that will not always be the case.

Big Oil has a bullish future.  So does BHP Billiton as it increases its footprint in oil production.  BHP Billiton is also shrewdly doing this in the United States, where the industry operates at its most efficient due to the economic stability and political security of the country.  That rising output in oil will be a very positive development for the stock price of BHP Billiton.

 

 



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