22nd Nov 2021 09:28
(Alliance News) - Miner BHP Group PLC on Monday finalised a merger of its oil and gas arm with Sydney-listed Woodside Petroleum Ltd.
Woodside will absorb BHP's oil and gas assets. The all-stock merger will see Woodside shareholders have 52% of the new company and BHP shareholders 48%. BHP and Woodside on Monday said they have now signed a binding share sale agreement.
Completion of the BHP oil and gas and Woodside deal is targeted in the second quarter of 2022. The combined entity will be the largest energy company listed on the ASX exchange in Sydney, Woodside said.
BHP valued its petroleum business at USD15.4 billion as of June 30, the company said in August when it announced the Woodside deal. Woodside currently has a market capitalisation of AUD21.04 billion, around USD15.26 billion. It means the deal is worth roughly USD30 billion.
Woodside shares closed 1.9% lower at AUD21.70 each in Sydney on Monday. BHP shares were up 1.0% at 1,902.20 pence each in London on Monday morning, and were up 1.3% to ZAR403.44 each in Johannesburg.
The two companies in August said they expect to achieve more than USD400 million per year in cost synergies from the combination.
"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," BHP Chief Executive Officer Mike Henry said at the time.
Referring to shareholder agitation for BHP to shed its oil exposure and become a pure miner, Henry said: "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."
In addition, the Scarborough liquefied natural gas project and the Pluto Train 2 developments in Australia were approved, Woodside said. In announcing a final investment decision, Woodside said USD12.0 billion will be spent on the projects.
"The USD12.0 billion (100%, USD6.9 billion Woodside share) LNG development is expected to deliver significant cash flow and enduring value to shareholders. Scarborough gas processed through Pluto Train 2 will be one of the lowest carbon intensity sources of LNG delivered to customers in north Asia, with first LNG cargo targeted for 2026," Woodside said.
BHP, meanwhile, also approved USD1.5 billion of capital expenditure at Scarborough. BHP is not a stakeholder at Pluto Train 2. It is currently wholly-owned by Woodside, though not for much longer.
Woodside last week Monday agreed to a deal with Global Infrastructure Partners to sell a 49% non-operating participating interest in Pluto Train 2. It will keep a 51% stake. The deal is expected to be sealed in January.
At Scarborough, BHP holds just shy of a 27% stake, with Woodside owning the remainder.
The final investment decisions at Scarborough and Pluto Train 2 will create more than 3,200 jobs in Western Australia, the state government said.
By Eric Cunha; [email protected]
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