U.S. oil and gas firm Anadarko
BHP, under pressure to land a big acquisition after losing a $39 billion bid for Canadian fertilizer giant Potash Corp
An unsourced report in Britain's Daily Mail said BHP Billiton may offer $90 per share, putting the miner's growth strategy back in the headlines during quiet holiday trade.
Anadarko's shares surged to their best level since mid-2008, exceeding highs reached before BP's
BHP shares meanwhile eased 0.6 percent in early trade, broadly in line with the overall market's <.AXJO> 0.5 percent drop.
Anadarko, which has a huge portfolio of deepwater oil and gas discoveries, has been touted as a likely takeover target for BHP since the Canadian government blocked the Potash bid in November.
Investors said BHP has grown so big in mining, takeover attempts would run into regulatory opposition, and the oil and gas sector, where it is relatively small, was the easiest path for the company to go.
Australian oil and gas play Woodside Petroleum
It is far from a done deal obviously but there is probably a higher probability of BHP buying Anadarko than Woodside
The portfolio of exploration and assets in Anadarko would be appealing to BHP and the stock has probably suffered in terms of fallout from the BP situation in the Gulf of Mexico so it might be an opportune time for BHP to make a step change in terms of that portfolio, he said.
One source familiar with BHP's thinking but not directly working with the company downplayed the Daily Mail report as unreliable.
A second source, an investment banker who has previously worked with the miner, said BHP traditionally surprised the market by bidding for a target which had not been the subject of long-running speculation.
However, fund managers and analysts said a BHP acquisition of Anadarko made sense for the miner.
They have a lot of good assets around the world, they would be a good buy for someone, Mike Breard, an oil analyst with Hodges Capital Management in Dallas, said, adding that Anadarko's future liability for the Gulf oil spill was still a big unknown.
It's not new but for whatever reason it's finding traction again this morning, said Peter Kenny, managing director at Knight Equity Markets in Jersey City, New Jersey.
A spokesman for Anadarko said it was company policy not to comment on speculation.
Shares of Houston-based Anadarko rose to a session high of $76.50, eclipsing a 52-week high of $75.07 reached on April 15, just days before the rig explosion and oil spill that spewed more than 4 million barrels of crude into the Gulf.
The stock later pared some gains, but ended up 6.9 percent at $75.59.
After the spill, shares of Anadarko slid to a low of $34.54 as investors worried over the company's liability in the disaster that left 11 workers dead and caused the worst U.S. offshore oil spill.
(Reporting by Michael Smith in Sydney and Anna Driver in Houston; editing by Balazs Koranyi)