This is a silly acquisition by BHP-Billiton. If you are going to invest in might oil & gas prices they should be looking at greenfields areas, or green technologies. For example, they ought to be exploring offshore NZ or India (as BP is doing). There is also compelling reasons for it to enter algal technological development, though it might well argue that it makes more sense for it to just purchase the technology when someone else has developed it. The problem is - the technology might be acquired before they can even get their hands on it by one of their competitors. Might it be difficult to know who will be the leader? My guess the oil company throwing the greatest amount of money at it..... at least you will get a market advantage....rather than throwing it away on market speculation.
The reality is that these companies are more interested in building on economies of scale, adding market premiums rather than creating wealth. They are accreters of assets, not builders of assets. Which means they just take advantage of cheap capital in global capital markets to add value, which is passed through to shareholders after they take their bite. Yes, it was always about the CEOs....leave the risks to the small enterprise which really build wealth. The small companies find the oil; the large companies spill it around the world's oceans.
OK, a little unfair. :)
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Andrew Sheldon www.sheldonthinks.com
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