Woodside, BHP confirm planned merger arrangements

Aug. 17, 2021
Woodside Petroleum and BHP Group have entered a merger commitment deed to combine their oil and gas portfolios via an all-stock merger.

Offshore staff

PERTH, AustraliaWoodside Petroleum and BHP Group have entered a merger commitment deed to combine their oil and gas portfolios via an all-stock merger.

This, they say, would create a global top 10 independent energy company in terms of LNG production. On completion of the transaction, targeted by October, BHP’s oil and gas business would merge with Woodside’s.

The expanded Woodside would be owned 52% by the company’s existing shareholders and 48% by BHP shareholders.

Benefits of the merger, according to Woodside, would include a greater scale and diversity of geographies, products and end markets through a strengthened and long-life conventional portfolio; a strong growth profile with a plan to target FID for the Scarborough gas development off Western Australia in the current calendar year; proven management and technical capability from both companies; and improved resilience, relative to the two companies’ standalone petroleum businesses.

Woodside CEO and managing director Meg O’Neill said: “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: “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.”

The combined business will have a projected conventional asset base producing around 200 MMboe (FY21 net production); a diversified production mix comprising 46% LNG, 29% oil and condensate and 25% domestic gas and liquids; production operations from Western Australia, eastern Australia, to the US Gulf of Mexico and Trinidad and Tobago; 2P reserves of more than 2 Bboe, comprising 59% gas, and 41% liquids.

Under the FID plan for Scarborough, the two parties have agreed an option under which BHP would sell its 26.5% stake in the Scarborough Joint Venture to Woodside and its 50% interest in the Thebe and Jupiter joint ventures to Woodside if Scarborough FID takes place by Dec. 15, with consideration of $1 billion payable to BHP with adjustment, effectively from July 1, 2021.

An additional $100 million would be payable contingent on a future FID for a Thebe development.

The Atlantis Phase 3, Mad Dog Phase 2, Shenzi North projects (all US GoM) and Sangomar field development Phase 1 (Senegal) remain on budget and on track, along with brownfield expansion options that provide opportunity for near- and mid-term growth.

Longer-term options include Wildling (US), Trion (Mexico), Calypso (Trinidad and Tobago) and Browse (northwest Australia).

Meg O’Neill would be CEO and managing director of the merged company, with a current BHP director to be appointed a Woodside director on completion of the transaction.