BHP may offload £8bn division

ANGLO-AUSTRALIAN mining group BHP Billiton will consider spinning off its £8bn oil and gas division, chief executive Chip Goodyear said.

He believes the market undervalues the business, which accounts for a quarter of BHP's profit. There are no immediate plans for a demerger, but Goodyear may put it on the block if the market fails to come around to his views of its worth.

Goodyear thinks the market has not appreciated the division's discoveries or its status as a low-cost producer.

The future of BHP's petroleum business, which produced 122m barrels of oil equivalent in the year to June, has been the subject of speculation since Australia's BHP merged with Billiton of the UK three years ago.

Analysts agree that BHP's share price, down 1/2p at 561 1/2p, does not fully reflect the value of the oil and gas operation which contributed £770m of the group's £3bn of earnings last year.