BHP Billiton To Hold Back On Buyback After Petrohawk Buy

BHP Billiton Ltd. (BHP) is stalling on any further purchases of its shares to protect its credit rating in the wake of this month's US$12.1 billion acquisition of U.S. shale gas company Petrohawk Energy Corp. (HK), Chief Executive Marius Kloppers said Wednesday.

Melbourne-based BHP says the Petrohawk deal will push up gearing levels, and absorb any surplus cash being thrown off by a global boom in commodities in the near term.

BHP continues to prioritize production volume growth, its balance sheet strength and shareholder dividends before looking to return surplus cash via buybacks, Kloppers told reporters on a conference call after the Anglo-Australian mining company reported an 86% increase in full-year net profit.

Mining companies have been under pressure from shareholders to hand over a greater share of the cash generated by strong demand for key commodities, particularly iron ore, coal and copper needed in rapidly industrializing China, India and other parts of Asia.

Rio Tinto PLC (RIO), the world's second-largest iron ore miner by output, said early this month that it planned to increase its share buyback to US$7 billion, from US$5 billion, and complete the program by the end of March. BHP in late June completed the repurchase of US$10 billion in shares, six months ahead of schedule.

Kloppers said the company's pro forma gearing ratio is expected to grow to about 27% following the integration of Petrohawk. Net gearing at the end of the year to June 30 was 9%.

BHP in its earnings statement said confidence in the long-term outlook for commodities and the buyback of shares enabled its board to declare a rebased dividend, with a final dividend of 55 cents. The payout to shareholders for the year as a whole is US$1.01 per share against 87 cents the year before.

The company said it has repurchased US$22.6 billion in shares since 2004, representing 15% of then issued capital.

-By Robb M. Stewart, Dow Jones Newswires; [phone]; [e-mail]

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