Woodside, BHP to merge oil, gas businesses
Australian Woodside Petroleum and BHP Group have entered into a deal to combine their respective oil and gas portfolios into a gas-heavy entity through an all-stock merger, they said on August 17. The merged entity will be owned 52% by existing Woodside shareholders and 48% by existing BHP shareholders.
It will be among the top 10 independent energy companies with production of 200mn barrels of oil equivalent for this full year, and 2P reserves of 2bn boe, 59% of which is gas. It is targeting synergies of $400mn/yr from corporate processes and systems, combining capabilities and improving capital efficiency.
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The new company will have high quality conventional asset base with LNG making up 46% of the output. Of the remainder 29% is oil and condensate and 25% domestic gas and liquids. The geographic spread is wide, with output from Western Australia, east coast Australia, US Gulf of Mexico, and Trinidad & Tobago with about 94% of production coming from OECD countries. Other benefits include "shared values and focus on sustainable operations, carbon management and ESG leadership."
Woodside has also confirmed acting CEO Meg O'Neill as its permanent CEO with immediate effect. She 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.
“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."
Chairman Richard Goyder said: “Meg is an outstanding executive with 27 years’ experience working in the global oil and gas industry, with a proven track record of delivery across the oil and gas value chain, making her the ideal person to lead Woodside as we significantly expand the business in a cost efficient and sustainable way."
O’Neill said her focus will be on delivering the significant benefits expected from the merger of Woodside and BHP’s petroleum business and continuing to reduce costs and carbon while delivering Woodside’s current projects and production.