BHP Group has signed a merger agreement to shift its oil and gas assets into Australian firm Woodside Petroleum
The all-stock merger will create one of the 10 largest independent oil and gas producers and the largest energy company listed on the Australian stock exchange, with assets worth US$28Bn.
Woodside will issue new shares to BHP shareholders while Woodside shareholders will own 52% of the expanded company.
The acquisition gives the company an expansive geographic reach with production from Western Australia, Australia’s east coast, the US Gulf of Mexico, and Trinidad and Tobago with approximately 94% of production from OECD nations.
The merged entity has a large asset base producing around 200 MMboe. Production is diversified with a focus on LNG which makes up 46% of production, oil and condensate counts for 29% and domestic gas and liquids for 25%.
Moreover, Woodside and BHP expect a final investment decision (FID) for the Scarborough project in offshore Western Australia by the end of the 2021, prior to the proposed completion date for the merger.
As part of the plan, there is an option for BHP to sell its 26.5% interest in the Scarborough joint venture and its 50% in the Thebe and Jupiter joint ventures to Woodside.
Woodside has also appointed acting chief executive Meg O’Neill as managing director and permanent chief executive. She succeeds Peter Coleman who retired as Woodside’s chief executive in June 2021.
Ms O’Neill said, “Merging Woodside with BHP’s oil and gas business delivers a stronger balance sheet, increased cash flow and enduring financial strength to fund planned developments in the near term and new energy sources into the future.”
“The proposed transaction derisks and supports Scarborough FID later this year and enables more flexible capital allocation,” she said.
BHP chief executive Mike Henry added, “The merger of our petroleum assets with Woodside will create an organisation with the scale, capability and expertise to meet global demand for the key oil and gas resources the world will need over the energy transition.”
Woodside added that the transaction is subject to regulatory and other approvals and expects to complete the merger in Q2 2022.
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