Woodside has confirmed plans to merge with BHP’s oil and gas business, with the new $40 billion entity to be led by Meg O’Neill.
Woodside has confirmed plans to merge with BHP’s oil and gas business, with the new $40 billion entity to be led by Meg O'Neill.
An announcement released after markets closed today revealed the details of the long-rumoured merger.
In the deal, Woodside shareholders would own 52 per cent of the new business, with existing BHP stakeholders controlling 48 per cent.
With Woodside’s current market capitalisation about $20.4 billion, the implied value for the new entity will be $39 billion.
The documents said the gross asset value of the BHP petroleum business at the end of the 2021 financial year was $US15.4 billion ($21 billion).
The move will expand Woodside’s exposure to two major assets in Western Australia, the Scarborough LNG project and the North West Shelf Venture.
The new business will have an asset base of around 200 million barrels of oil equivalent annual production, with 46 per cent LNG.
Woodside confirmed the appointment of Meg O'Neill as chief executive, with $2.2 million fixed remuneration and an incentive scheme with a target value of $4.4 million.
Ms O'Neill said the merger would deliver a strong balance sheet, improved cash flow and financial strength to fund developments.
Woodside’s advisors were Gresham Partners, Vinson & Elkins, Morgan Stanley, and King & Wood Mallesons, while BHP’s were JP Morgan, Goldman Sachs, Barclays, and Herbert Smith Freehills.
Briefing
The deal is expected to close in the second quarter of 2022, with an effective date of July 1, 2021.
Woodside told investors in a briefing call this evening it intended to remain headquartered in Perth, with a potential London or New York second listing for the merged business.
It also hopes to make a final investment decision on Scarborough and Pluto this year, but it would be conditional on a selldown of Pluto.
Woodside said the data room was open for both those sales, and expressed confidence it would secure interest.
BHP will also be given an option to sell its 26.5 per cent share of Scarborough for $US 1 billion to Woodside if the deal does not proceed.
BHP will bring assets in the US Gulf of Mexico, Australia, Trinidad and Tobago, and Algeria to the new company, as well as appraisal and exploration options in Mexico, Deepwater Trinidad and Tobago, Western Gulf of Mexico, Eastern Canada and Barbados.
Those include the Mad Dog project in Gulf of Mexico.
All up, the combined business would be one of the 10 biggest independent oil producers, Woodside said.
