Thursday newspaper share tips: Falling oil prices threaten BHP Billiton's strategy

Falling oil prices are threatening BHP Billiton’s strategy to diversify into oil and gas, The Telegraph’s Questor wrote on Thursday.

Oil prices have been plummeting amid geopolitical flare-ups in the Middle East and oversupply concerns continuing to dominate market sentiment.

Questor noted that shares in the miner area heading back towards 10-year lows, as the company leans on its oil and gas division more than other.

While the plan to diversify the company makes sense on paper according to the columnist, events in the Middle East weren’t predicted, which has affected oil prices and subsequently will hit BHP Billiton.

On top of that, Questor highlighted that the slowdown in China has hit the mining sector, the main part of BHP Billiton’s business.

“For the FTSE 100 miners there is simply no escape, whatever their strategy may have been.”

Add to the equation the company’s dam bursting at its Samarco mine in Brazil, with a possible £3.5bn fine on the dam owners (of which it owns half with Vale) as well as payments to the victims and families.

While management have reacted to the downturn by cutting capital expenditure, a move which was “laudable”, Questor said the downturn has entered a new phase.

“We recommended selling shares in BHP at £17 in September 2014 and, until there are some signs of stability in the price for commodities, that advice remains.”

In The Times, Tempus is suggested traders make a bet on the Ladbrokes and Coral merger.

The two betting companies are due to combine this year, pending the results of a Competition and Markets Authority (CMA) investigation.

Tempus said while it’s hard to see how the group will look exactly when the two companies come together, but there is certainty it will happen.

Where things are uncertain is when it comes to the CMA, the column said, and what orders they might make to allow the merger to go ahead.

The options include demanding the sale of 1,000 of its shops so it doesn’t overshadow William Hill’s 2,400 outlets.

However it might only ask for 750 outlets to go – a number which Tempus said Numis Securities is gunning for.

It said that providing the outcome of the CMA investigation is good, which won’t be completed until the second half of the year, the combined group will be in a much better position to take the competition, and recommended to buy Ladbrokes long term.