BHP Billiton is the latest example of a business yielding to the inevitable as profits from oil tumble, forcing a 40% reduction in its onshore rig count and what could be the company’s first fall in annual oil output in 10 years.

BP is the hot favourite for a spot of M&A activity as that old chestnut of a takeover bid from Royal Dutch Shell re-surfaced, along with reports of interest from an even bigger predator, ExxonMobil.

Meanwhile, last week’s forecast from the investment bank, Goldman Sachs, that only “uncomplicated” oil and gas projects will win approval in the near future appears to be bearing fruit as a queue forms to bid for shallow-water exploration tenements in Mexico.

Interestingly, BHP Billiton is said to be one of seven potential bidders authorised by Mexican authorities to buy access to data covering 14 tenements, the first such invitation extended to foreigners by the Mexican government in more than 75 years.

Important as Mexico’s new open-door policy might be for the country the more notable aspect is that the acreage being offered has attracted any interested bidders at a time when the oil price is struggling to get back over $US50 a barrel.

The better-than-expected level of interest is partly explained by the relative simplicity of the offering, shallow water and a high degree of preliminary exploration work by the Mexican national oil company, Pemex.

But, paying for the right to access the Mexican data room is one thing, committing to the costs of an offshore exploration project is another though that seems likely to happen because the projects on offer fit the Goldman Sachs definition of uncomplicated.

The difference between uncomplicated offshore work in search of conventional oil and gas accumulations is in stark contrast to what’s happening to BHP Billiton’s unconventional onshore shale exploration effort in the US.

Across the border BHP Billiton is starting to feel the heat of the oil price collapse, announcing last week that it would mothball 10 of 26 drilling rigs it has operating across its various shale exploration projects and hinting that $US2 billion could be wiped off its shale drilling budget next year.

Much of the recent action at BHP Billiton has been reported, using the company’s own comments about the planned cutbacks.

Less has been said about whether problems in the shale patch have added to pressure on BHP Billiton’s management to explain how it proposes to dig the company out of four problem divisions while also spinning off what suddenly look to be the best bits of the business.

Coal has already suffered heavy duty cutbacks. Iron ore is holding its ground but watching profits shrink, copper profits are sliding away in line with the copper price, and now the oil division which once separated BHP Billiton from other mining companies has become a problem.

Pressure to abandon the proposed spin-off of an assortment of assets regarded as non-core is likely to increase as BHP Billiton struggles to generate the profits required to lift its dividend (as promised), engage in a big share buy-back (as promised), and maintain a meaningful asset development program.

The third big issue which popped up for a fresh airing last week was the likelihood of a bid for BP as it continues struggle with legal problems associated with the 2010 oil spill in the Gulf of Mexico.

Weakened by the Macondo disaster and low oil prices the stock market value of BP has dropped to just over $100 billion, making it minnow alongside Exxon’s near $400 billion and even small against the $200 billion value assigned to Shell and Chevron.

Whether a rival is prepared to take the plunge and bid for BP at a time of low oil prices, which is traditionally when such moves are made, is regarded as possible but unlikely.

What could save BP from a bid is not its price or the quality of its assets, but two other factors which could give a new owner a severe case of financial indigestion.

The first cause of heartburn for a new owner is the Macondo issue and the problem of not really knowing when the US government is going to take its hands off BP’s throat.

The second is more unusual: Russia.

BP is a partner with Rosneft, Russia’s biggest oil producer, and while the relationship has not become a political issue yet it almost certainly would if an American company, such as Exxon or Chevron, tried to buy the London-based BP.

That leaves Shell as the likely bidder, and while it’s been in that position for some time the problems of Macondo, Russia and anti-monopoly issues could see it shy away, again.