Woodside and BHP have entered into a merger commitment deed to combine their respective oil and gas portfolios by an all-stock merger to create a global top 10 independent energy company by production.
On completion of the transaction, BHP’s oil and gas business would merge with Woodside, and Woodside would issue new shares to be distributed to BHP shareholders.
The expanded Woodside would be owned 52 per cent by existing Woodside shareholders and 48 per cent by existing BHP shareholders.
The transaction is subject to confirmatory due diligence, negotiation and execution of full form transaction documents, and satisfaction of conditions precedent including shareholder, regulatory and other approvals.
Woodside reported that the proposed merger would create the largest energy company listed on the ASX, with a global top 10 position in the LNG industry by production.
The combined company will have a high margin oil portfolio, long life LNG assets and the financial resilience to help supply the energy needed for global growth and development over the energy transition.
Woodside chief executive officer and managing director Meg O’Neill said merging the two company’s oil and gas s 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 proven capabilities of both Woodside and BHP will deliver long-term value for shareholders through our geographically diverse and balanced portfolio of tier one operating assets and low-cost and low-carbon growth opportunities,” she said.
“The proposed transaction de-risks and supports Scarborough FID later this year and enables more flexible capital allocation. We will continue reducing carbon emissions from the combined portfolio towards Woodside’s ambition to be net zero by 2050.”
BHP CEO Mike Henry added that the merger of its petroleum assets with Woodside will create an organisation with the scale, capability and expertise to meet global demand for key oil and gas resources the world will need over the energy transition.
“Bringing the BHP and Woodside assets together will provide choice for BHP shareholders, unlock synergies in how these assets are managed and allow capital to be deployed to the highest quality opportunities,” he said.
“The merger will also enable the skills, talent and technology of both organisations to build a resilient future as the world’s needs evolve.”
On Monday Woodside confirmed it was in discussions with BHP about a potential merger involving BHP’s entire petroleum business.
The company advised that it continuously reviews the composition of its asset portfolio and opportunities to create and deliver value for shareholders.
BHP has also confirmed that it had initiated a strategic review of its petroleum business to re-assess its position and long-term strategic fit in the BHP portfolio.
The company stated a number of options are being evaluated, with one option being a potential merger of the petroleum business with Woodside.
“We confirm that we have been in discussions with Woodside. While discussion between the parties are currently progressing, no agreement has been reached on any such transaction,” BHP reported in a media release.
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