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BHP suppress compelling value: Citi

THE combined blow of the Rudd governments proposed funds tax and BP's gulf oil spill has wiped $55 billion in appraise from BHP Billiton, but this could be too much, with the miners estimation "too compelling to ignore".

In a note to clients this peep of day, Citi said its worst case scenarios for both elements would impression its discount to cash flow (DCF) valuation less than the place of traffic’s reaction and reiterated its buy recommendation with a $50 mark.

“Combining our worst-case scenarios for both elements would impression our DCF valuation by only $35bn, which is less than the $55bn of duration destruction we argue is implied in the current share price,” related analyst Clarke Wilkins.

Mr Wilkins also said BHP could be a winner from BP’s predicament and snap up some of its assets in the Gulf of Mexico.

“In the termination that some of BP’s assets in the Gulf of Mexico are shaken candid, we think BHP would be in a prime position to enlarge its stakes in Atlantis, Mad Dog and Gunflit (in which we import BP’s share at c$11bn),” he said.

bennetm@theaustralian.com.au