Energy Stocks In Your Future

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Canadian Natural Resources Stock Guide: What to look for in Canadian Energy Stocks and more

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Topic: Energy Stocks

World's largest mining company steps up oil and gas assets

BHP Billiton - commodity investment image

American Depositary Receipts make foreign investing easier and safer for individual investors. The foreign company must provide detailed financial information to U.S. regulators and to the sponsor, or depositary, bank or broker. As well, since ADRs trade on U.S. stock exchanges in U.S. dollars, you don’t have to worry about currency exchange rates, foreign stock exchange rules, or language barriers.

Today we highlight one of the world’s most prominent commodity stocks, an ADR with its home base in Australia, and one that made headlines in Canada when its attempted takeover of Potash Corp. of Saskatchewan (Toronto symbol POT) was blocked by Ottawa in 2010.

BHP Billiton Ltd. ADRs (New York symbol BHP; www.bhpbilliton.com) is the world’s largest mining company, with operations in Australia, South Africa, Chile and the U.K. It produces iron ore, coal, oil, natural gas, aluminum, manganese, diamonds and titanium.

In 2011, BHP expanded its oil and gas business with two major purchases: it paid $12.0 billion for Petrohawk Energy Corp., which produces oil and natural gas in Texas and Louisiana; and $4.75 billion for shale gas properties in Arkansas.

These acquisitions increased BHP’s oil and gas production by 58% in three months ended March 31, 2012, to 56.5 million barrels of oil equivalent (including gas) from a year earlier.

Energy Stocks In Your Future

Learn everything you need to know in 'Power and Profits of Energy Stocks' for FREE from The Successful Investor.

Canadian Natural Resources Stock Guide: What to look for in Canadian Energy Stocks and more

 I consent to receiving information from The Successful Investor via email. I understand I can unsubscribe from these updates at any time.

BHP also reported that its iron ore production rose 14% in the latest quarter, to 37.9 million tonnes (iron ore supplies a third of BHP’s revenue). However, its production is down 8% from the previous quarter, because heavy rain slowed operations at its open pit mines in Australia.

Similarly, metallurgical coal production rose 10%, to 7.3 million tonnes. However, that’s down 14% from the previous quarter due to labour disruptions and the heavy rains in Australia.

The company’s balance sheet remains strong. Its long-term debt of $18.7 billion is a low 11% of its market cap. It holds cash of $3.6 billion, or $1.35 per ADR.

BHP should earn $6.12 per ADR in its 2012 fiscal year, which ends June 30, 2012. It trades at 10.3 times that estimate. The $2.20 dividend yields 3.5%.

In the latest edition of Wall Street Stock Forecaster, we look at BHP Billiton’s plans to build a new potash mine in Saskatchewan and expand mining operations in Australia and Chile and how those plans may be affected by the impact of a weaker European economy on commodity prices. We conclude with our clear buy-hold-sell advice on the stock.

COMMENTS PLEASE

Did you agree with the Canadian government’s decision in 2010 to block the sale of Potash Corp. to BHP Billiton? Did you believe it was an economically sound decision, or were the Conservatives simply playing politics? Is “Canada’s national interest” more important than your right to make money from your investments? Let us know what you think in the comments section below. Click here.

Comments

  • John 

    I believe the government was playing politics, wanting to make sure that they would not lose any of their Saskatchewan MP’s.

  • Irene 

    I did strongly agree with the Canadian governments position in 2010 to block the sale of Potoash Corp.

  • Yvette 

    I strongly agree with the decision to block the sale of Potash Corp. and believe it was a bad mistake to sell Inco. These and other major resource companies are valuable Canadian assets and should be kept within our national control. While I generally agree with Kevin O’Leary, the almight dollar is NOT the only nor the most important value in life. I am a senior Canadian who wants us to keep control over our Canadian way and quality of life. The rest of the world keeps voting us as the best country in which to live. Giving control of our major assets to other countries who do not share our values in many ways will rob future generations of a chance to enjoy the type of life we as Canadians are generally in agreement with about.

  • Ron 

    I agree with the Government. This asset is too big & too important to Canada to be taken over by a foreign
    company.

  • only a fool would sell one of the worlds crown jewels used to produce the worlds most needed commodity – food . would you trade food for toilet paper ? the u.s. dollar is being printed at will – it will soon be worthless . this is not politics , its common sense. many thanks to the harper government in this case .

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