The speculation is over—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.
The deal will see BHP’s oil and gas business merge with Woodside, with Woodside issuing 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 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 CEO and managing director Meg 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.
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“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.
“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 said, “The merger of our 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. The merger will also enable the skills, talent and technology of both organisations to build a resilient future as the world’s needs evolve.”
The combined business will benefit from the joint management and technical petroleum expertise of both companies, led by Meg O’Neill as the CEO and managing director.
“Leading HSE performance, LNG production and marketing, deepwater oil development and production, exploration success, and international experience will come together to create a differentiated set of capabilities,” Woodside said in its statement.
“These capabilities are further supplemented through investments in technology and low carbon solutions, and strong governance systems. In addition, it is intended that the Woodside Board will appoint a current BHP director as a Woodside director on completion.”
The merger is expected to be completed in the second quarter of the 2022 calendar year with an effective date of July 1, 2021.
The news was met with outrage from climate groups, with protesters gathering outside BHP’s Perth headquarters to protest the merger.
Campaigners from 350 Perth; Sea Shephard and Fossil Free UWA attempted to deliver more than 5,000 individual petitions from across Australia urging BHP to prevent the controversial proposed Scarborough project in WA’s north west from progressing.
Environmental groups say that the project, which is currently awaiting final investment decision, would be among the most damaging fossil fuel projects in the Southern Hemisphere, releasing 1.6 billion tonnes of carbon into the atmosphere over its life.
The deal comes just a week after the IPCC released a damning indictment of the fossil fuel industry’s failure to act on emissions reduction.
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Anthony Collins, a campaigner with the climate change movement, 350 Perth, said, “The aim of today’s demonstration is quite simple. To show BHP that simply dumping their fossil fuel projects at the feet of Woodside is not going to cut it.
“Rather than take responsibility for the highly polluting petroleum business sites BHP has built, this is a cynical attempt to simply walk away.
“Ultimately, Woodside is acting as BHP’s ‘useful idiot’; taking on a burden that BHP has decided is too toxic to touch.
“Woodside itself has demonstrated that it has no interest in anything other than producing as much oil and gas as possible and has neither the ability nor the willingness to make its business model appropriate for the times in which we live. This deal allows them to continue expanding fossil fuel production, accelerating damage to the climate.
“This means more oil and gas in Western Australia and another step closer to the highly controversial Scarborough project, which will release 1.6 billion tonnes of carbon into the atmosphere.”
