7 July
Melbourne,
Dow Jones

MELBOURNE -(Dow Jones)- BHP Billiton Ltd. (BHP) said Monday it has exercised its right to ask for a 20 day extension of the European Commission’s review of its bid for rival Rio Tinto Ltd. (RTP), meaning an offer document for the bid could come as late as March 2009.

The European Commission announced Friday, as expected, that its review would enter a second phase, giving it 90 days to complete its assessment with a final decision due by November 11.

Under European Commission regulations, BHP has the right to request a further extension and the miner said Monday this has now been granted.

"BHP Billiton has exercised its right to request a 20-day extension to the Phase II timetable, which extends the date by which the Commission must complete its review until 9 December 2008," a spokeswoman for BHP said Monday.

"This is consistent with our previously stated expectation that the regulatory process will complete in the fourth quarter."

In a statement Friday, the European Commission said its initial market investigation has raised concerns the deal could result in higher prices and reduced choice for customers of the combined entity, and those close to BHP say it has sought the extension to ensure there is plenty of time to deal with any issues that are raised.

Once the European Commission makes its decision, BHP has 80 days to file its formal offer documents for its bid, raising the prospect that this may now happen as late as March.

As a result, BHP may now be able to post its first half results before formally launching its offer, which is valued at around US$170 billion.

With soaring earnings from its oil division expected to swell the first half profit, some market watchers say BHP may be looking to use the first half result to help promote the value of its all-share offer of 3.4 of its shares for every Rio Tinto share held.

New oil and gas developments are boosting BHP’s petroleum production at a time of record high prices, giving it short-term earnings momentum that it is expected to make the most of in the tussle with its rival.

The latest of BHP’s oil and gas developments to come on line is the Neptune project in the Gulf of Mexico, which began production on Sunday.

The Neptune facility has production capacity of 50,000 barrels of oil and 50 million cubic feet of gas per day.

First production had originally been planned in the first quarter of calendar 2008, but was delayed due to structural anomalies with the hull that required remedial work.

BHP is operator of Neptune with a 35% stake alongside joint venture partners Marathon Oil Corp. (MRO) with 30%, Woodside Petroleum Ltd. (WPL.AU) holding 20% and Maxus Exploration with 15%.