BHP Billiton Offers $15 Billion for Petrohawk; FBI Investigates News Corp

Marcus Jacob
15 Jul, 2011
New York City

Australian stocks closed lower. BHP Billiton agreed to acquire Petrohawk Energy for $12.1 billion and assume $3 billion in debt. Fortescue Metals production rose 6% in the quarter but costs surged 18%. News Corp woes deepened as lawmakers in the U.S. and UK deepen investigations.

[R]4:30 Sydney – Australian stocks closed lower. BHP Billiton agreed to acquire Petrohawk Energy for $12.1 billion and assume $3 billion in debt. Fortescue Metals production rose 6% in the quarter but costs surged 18%. News Corp woes deepened as lawmakers in the U.S. and UK deepen investigations.[/R]

Australian stocks turned lower on weak global market sentiment. Retail stocks were lower for the second day and BHP Billiton decreased after a deal announcement. News Corp woes deepened as the company faces multiple inquiries in the U.S. and UK.

Rupert Murdoch controlled News Corp, the parent of FOX News on cable network is facing multiple investigations for its news gathering techniques and systemic journalistic failures.

The media mogul Murdoch has so far failed to apologize to the parents of teenage murder victim and fallen soldiers whose phones were hacked to sell salacious stories in the now shuttered UK tabloid. The tabloid also bribed UK police to obtain telephone numbers of various targets.

In the U.S., FBI opened its investigation and to determine the company’s activities in hacking the Sept 11 victims’ phone records. There have been several allegations about the hacking for years but until now no investigation has been launched.

The ASX 200 index decreased 17.20 or 0.4% to 4,473 and All Ordinaries index dropped 18.60 or 0.4% to 4,542.

The Australian dollar decreased 0.6% to US$1.07. Spot gold in Sydney trading decreased $3 to US$1,581.80 an ounce.

In trading, turnover increased to 1.87 billion shares worth $5.01 billion and 399 shares closed higher, 604 declined and 368 were unchanged.

BHP Billiton agreed to acquire the U.S. based Petrohawk Energy for US$12.1 billion. The deal will catapult the largest mining company in one of the largest independent shale oil explorer in the world.

BHP will also assume US$3 billion of debt and takeover 1 million acres in Texas and Louisiana with the estimated daily production of 158,00 barrels of oil in 2011.

Stock Movers

BHP Billiton decreased 71 cents to $42.89 and Rio Tinto added 41 cents to $81.36. Fortescue Metals Group decreased 1 cent to $6.41.

Fortescue Metals said June quarterly production of iron ore increased 6% from the previous quarter to 11.5 million tons. However, production cost rose to US$53.23 a ton in the quarter from the US$44.96 a ton in the March quarter.

The iron ore miner said it average sale price increased to US$158 a ton.

Newcrest Mining increased 47 cents to $40.27 and Kingsgate Consolidated added 27 cents to $8.60.

News Corp extended losses for the fourth day in the last five days by 2.8% or 43 cents to $14.77. The company is embroiled in various investigations after years of systemic journalistic failures at its UK tabloid and newspaper operations.

David Jones declined for the second day and fell 5 cents to $3.15 and Myer fell 5 cents to $2.43.