Sydney, Feb. 7 (Reuters): BHP Billiton announced the surprise resignation of chief executive Chip Goodyear and set an extra $10 billion in share buybacks, driving its shares up 6 per cent on Wednesday.

Reporting a 41 per cent jump in first-half profit, just below market expectations, BHP said it would look both in-house and externally to replace Goodyear by the end of the year, while over the next 18 months, it will buy back 9 per cent of its stock.

“It is pretty amazing, and basically what they are saying is they are confident of generating an awful lot of cash over the next 18 months, and they are happy to give it back to shareholders,” said Mark Daniels, director of equities with Aberdeen Asset Management.

BHP, which has a dual listing in Australia and London, is adding $10 billion to a previously announced return of $3 billion to shareholders. It has also earmarked $17.5 billion for 29 new projects worldwide, but still has enough cash for potential acquisitions, analysts said.

“They have a lot of cash to play with,” said JP Morgan analyst David George. “In no way does it preclude them making acquisitions, even of size.”

BHP stock, which rose 5.9 per cent in Australia to end at a 24-week closing high of A$28.24, was up 4.7 per cent at 1,032 pence in London by 0840 GMT after an earlier high of 1,041.5 pence.

Goodyear, 49, the second successive American to head The Big Australian, said his decision to retire from BHP after nine years — five as CEO — was part personal and part professional. “I generally stay in an organisation for something like eight to nine years and that’s good for personal renewal and for corporate renewal,” he said.

Descended from a US lumber baron and schooled at Yale and Wharton School of Finance, the ever-youthful Goodyear galloped into a then debt-riddled BHP in 1999 as chief financial officer.

He was one-half of an American duo headed by Duke Energy Corp’s Paul Anderson imported to quickly stop the bleeding and rebuild The Big Australian after a series of investment blunders.

Speculation swirled that BHP board members Marius Kloppers, who joined the company via the 2001 merger with Billiton, and carbon steel materials head Chris Lynch were potential successors.

“I’m a little bit surprised with the impending resignation of Goodyear, but the management team is obviously quite deep,” said Adam Dixon, a portfolio manager with Ausbil Dexia Ltd. Goodyear was regarded as instrumental in sorting out a culture clash between BHP and Billiton, and in injecting more fiscal discipline.

“They didn’t lose their heads chasing acquisitions,” ABN Amro analyst Rob Clifford said.

The company’s July-December net profit rose to $6.17 billion from $4.36 billion a year earlier due to strong markets for most mineral commodities — just below forecasts for about $6.3 billion.

BHP said market indicators did not suggest a largescale build-up in commodity inventories in 2007, although demand was still likely to vary regionally.

China is set to continue as the main driver of demand, but more mature markets may also lend support, especially Europe and Japan, according to Goodyear.

The interim result showed hefty earnings contributions from the base metals and carbon steel materials divisions.

Higher prices for nickel, copper, aluminum, iron ore, petroleum products, zinc, alumina, energy coal, silver lead, manganese alloy and diamonds contributed about $4.2 billion to earnings before interest and tax (EBIT), BHP said.

“It’s been a fantastic six months," Goodyear told reporters. “We continue to see the outlook for economic development around the world to be quite positive, and a company with the resource base that we have and the opportunity set we have, we think is well positioned to continue to provide strong performance,” he said.