Published: August 25, 2021 |

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BHP Group has signed a merger commitment deed with Woodside Petroleum to combine its oil and gas business with the latter to create a A$41 billion ($29.8 billion) energy company.

A sales and purchase agreement (SPA) in this regard is expected to be signed by the parties in October 2021.

The consideration will involve the distribution of Woodside’s shares to BHP. Post-merger, Woodside’s shareholders will have a stake of 52 percent in the enlarged company, while BHP’s shareholders will own the remaining 48 percent stake.

The combination is expected to create one of the top ten energy companies in the world on the basis of production volumes.

The enlarged firm will have nearly 200 million barrels of oil equivalent (MMboe) production in 2021. Of this, 46 percent will be liquefied natural gas (LNG), 29 percent will be oil and condensate, and 25 percent will be domestic gas and liquids.

Its 2P reserves will be 2,023MMboe, while the 2C resources will be 8,356MMboe.

The enlarged entity will have production assets in Australian waters, the U.S. Gulf of Mexico, offshore Trinidad and Tobago, and Senegal.

BHP has been reportedly planning an exit from oil and gas operations as part of its efforts to shift away from fossil fuels.

“The merger of our petroleum assets with Woodside will create an organization 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,” said BHP CEO, Mike Henry.

“The merger will also enable the skills, talent and technology of both organizations to build a resilient future as the world’s needs evolve,” added Henry.

As part of their deal, Woodside and BHP have come up with a plan to target final investment decision (FID) for the Scarborough project in Australia by the year-end. BHP will have an option to sell its stake of 26.5 percent in the Scarborough joint venture to Woodside.

The company also agreed to divest its 50 percent stake in the Thebe and Jupiter joint ventures to Woodside, subject to the Scarborough JV reaching an FID by 15 December 2021.

Should the deals take place, then BHP will be entitled to a payment of $1 billion and a contingent amount of $100 million, which will be subject to an FID taken on the Thebe development in the future. The option is exercizable by the company in the second half of next year.

“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,” said Woodside CEO and Managing Director, Meg O’Neill.

“The proven capabilities of both Woodside and BHP will deliver long-term value for shareholders through our geographically diverse and balanced portfolio of tier 1 operating assets and low-cost and low-carbon growth opportunities,” added O’Neill.

The merger, which is expected to be closed in Q2 2022, will be subject to confirmatory due diligence, negotiation and signing of transaction documents, and shareholder, regulatory, and other preceding conditions.

Source: NS Energy

About BHP Group
BHP Group engages in the natural resources business in Australia, Europe, China, Japan, India, South Korea, rest of Asia, North America, South America, and internationally. It operates through Petroleum, Copper, Iron Ore, and Coal segments. The company engages in the exploration, development, and production of oil and gas properties; and mining of copper, silver, zinc, molybdenum, uranium, gold, iron ore, and metallurgical and energy coal. It is also involved in mining, smelting, and refining of nickel; the provision of towing, freight, marketing and trading, marketing support, finance, administrative, and other services; and potash development activities. The company was founded in 1851 and is headquartered in Melbourne, Australia.

To stop by BHP’s website, CLICK HERE

About Woodside Petroleum
Woodside Petroleum (also known as Woodside Energy) is a natural gas producer providing sustainable energy solutions. It engages in the exploration, evaluation, development, production, marketing, and sale of hydrocarbons. Woodside’s products include liquefied natural gas, pipeline natural gas, condensate, liquefied petroleum gas, and crude oil.

To stop by Woodside’s website, CLICK HERE

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