Woodside, BHP discussing merger

Aug. 16, 2021
Woodside Energy has confirmed that it is in talks with BHP Petroleum on a potential merger involving BHP’s entire petroleum business.

Offshore staff

PERTH, Australia – Woodside Energy has confirmed that it is in talks with BHP Petroleum on a potential merger involving the latter’s entire petroleum business.

This would be done via a distribution of Woodside shares to BHP shareholders.

Wood Mackenzie research director Andrew Harwood said: “A merger would create a new international ‘super independent’ built for scale and resilience, with a long-term focus on LNG but exposure in the medium term to high-margin, deepwater oil. 

“BHP’s oil operations in the Gulf of Mexico [GoM] complements Woodside’s deepwater capabilities and add a new core focus area to Woodside’s existing portfolio. BHP has recently sanctioned $800 million of new investment at the Shenzi hub in the GoM and is progressing the Trion project in Mexico. 

“Woodside would also strengthen its position in its key North West Shelf LNG and Scarborough assets. Woodside would be firmly in control of the Scarborough development but will continue to look for new partners to optimize future capital outlays.

“Over the next decade, he added, steady cash flow from BHP’s GoM fields would provide steady shareholder returns, also supporting planned investment in LNG growth and other new energy opportunities.”

“Following hot on the heels of Santos’ proposed merger with Oil Search, a Woodside-BHP combination is further evidence of oil and gas operators seeking solace from longer-term uncertainty through scale, and doubling down on long-term, cash-generative, resilient resource themes.  

“For the wider Australia E&P sector, a second merger proposal will give Australia another homegrown heavyweight that can compete on the international scene. The inevitable optimization of enlarged portfolios will also provide opportunities for other players looking to squeeze value from assets deemed surplus to requirements by these newer and bigger entities.” 

Woodside also announced that it has obtained environmental approval for the nearshore component for the Scarborough gas development from Western Australia’s Minister for Environment Amber-Jade Sanderson.

This authorizes installation of a 32-km (19.9-mi) section of the Scarborough trunkline within State waters and associated pipeline construction activities.

NOPTA issued approval for extraction and processing of Scarborough’s gas in March 2020.

Woodside’s development proposals call for new offshore facilities connected by a 430-km (267-mi) pipeline to a proposed expansion of the existing Pluto LNG onshore complex. The company is targeting FID for Scarborough and Pluto Train 2 later this year.