BHP Billiton Ltd. (BHP) Steps up Oil and Gas Exploration, says Unit President

BHP Billiton Ltd. (NYSE: BHP) said Monday it is embarking on an acquisitions program to expand its business while the recent market selloff of global assets has reached attractive levels.

The Australia-based global miner also said the Gulf of Mexico oil-spill crisis has impacted some of its projects there, cutting top-line growth from its previous guidance of 10 per cent growth for the year ending June 10.

�We have not spent much time externally. But we are now spending more time externally,� BHP’s petroleum president Michael Yeager said. �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,� Yeager added.

Yeager said to Reuters that BHP petroleum unit decided to restart its exploration program, but he didn�t comment further about the intentions of BHP�s other commodities units.

One possible acquisition involves speculation surrounding BHP�s smaller rival Woodside Petroleum Ltd., which partners with the Aussie giant in important projects in multiple regions throughout the world, including projects in Australia and the Gulf or Mexico.

Gulf of Mexico

Yeager said the Gulf of Mexico projects continue to be impacted by the oil spill at the British Petroleum (BP) Macondo well, which BHP responded with diverting two of its four drilling rig�which were slated for its own Atlantis and Mad Dog fields�to help containment operations at the spill site.

BHP said it intends to develop the Atlantis oil field despite uncertainties of the future of the Gulf, saying it remains committed to the region, and seeks the potential for significantly expanded revenue from its operations there.

“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,” Yeager said.

BHP�s major concern regarding the Atlantis oil field is the potential political response to the Gulf spill from many U.S. legislators and President Obama who seek an investigation into safety issues at the platform. BHP has a 44 per cent stake in the project, and BP has the rest.

According to BHP�s latest filing, its petroleum business accounts for approximately 25% of its combined earnings.

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Swing And Day Trader Stock Market Analysis For The Week Ahead

Last week the S&P successfully tested the 20 day moving average on Monday and broke out Tuesday with the rest of the week spent near Tuesday’s highs. With the US dollar continuing to dive and crude turning up (helping oil production and service companies) the market hasn’t been willing to give back much before the buyers jump in. The only negative has been in interest rates, which have fallen. This generally indicates money flowing out of the market, however in this case it may simply indicate money flowing out of the US Treasury to drive rates lower.

Additional confirmation of market optimism came from the VIX, which broke below the lows of the last several months, returning to levels not seen since early May. The Volitility Index (VIX) measures volatility of Index options and is also known as the Fear Index, where lower numbers mean lower fear (greater optimism). So the uptrend continues and we should look to buy pullbacks in strong stocks while confining shorts to intraday trades on relatively weak stocks.

Transportation was among the stronger sectors last week, having traded above weekly resistance the prior week, and closing higher this week. FedEx (FDX) shows a similar pattern, and broke out on Friday over recent daily highs while showing increased volume. The technical entry for a daily long would be above Friday’s high, with a stop under Thursday or Friday’s low, but an intraday pullback would provide a more favorable reward/risk. First target would be the daily pivot at $90, with a second target of $92.50-$93.50.

Another stock closing above its recent range on Friday was Humana (HUM). The HMO sector triggered as a daily buy setup on Friday after pulling back to the 20 day ma, while HUM probed lower a couple of times during the week before breaking above the daily range on increased volume on Friday. HUM could be traded long above Friday’s high ($51.01), and because the technical stop on the daily chart would be quite far away, a stop could be taken from the 60 min chart under $50.40 or under $49.80. Targets would be $51.40 and $53.

Coal stocks showed considerable strength last week. Massey Energy (MEE) broke above a key resistance level on Friday, while showing higher volume on both Wednesday and Friday’s green bars than on Thursday’s red bar. Although it is extended at the moment, watch for a pause or pullback on the daily chart, or a pullback to the 20ma on the 60min chart for a long entry for an eventual move to the 200 day ma at $37.50 or the daily pivot high at $39.

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