BHP Bid For Woodside Looks Even More Doubtful

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A bid by BHP Billiton, the world's largest mining company, to acquire Woodside Petroleum, Australia's second-largest oil and natural gas producer, appears even more in doubt after a Credit Suisse analyst report said Woodside may be preparing to purchase the stake in itself that Royal Dutch Shell is looking to sell.

To raise the $9 billion necessary to acquire Shell's 24.27% interest in Woodside, the latter could sell stakes in Australian natural gas ventures to Japanese firms, Bloomberg News reported, citing the Credit Suisse report. While Shell (RDS-A), Europe's largest oil company, previously announced it would divest its Woodside stake, recent confirmation of the sale heightened speculation BHP may move on Woodside.

In recent weeks, banks including Goldman Sachs and Citigroup, have expressed doubt that BHP (BHP) is a credible buyer for Woodside. BHP has also been mentioned as a possible buyer of the Shell stake in Woodside, though it is unlikely that would serve as merely an investment, and if Woodside and Shell come to terms, the issue is a moot point.

Separately, options traders appear to be betting on a decline for BHP whose ADRs touched a new 52-week high today and just pennies away from the $100 mark. A purchase of purchase of 10,000 BHP May 95 puts for $2.24 and the sale of the same number of May 85 puts for 57 cents was spotted today.