On 1 June 2022, BHP’s oil and gas portfolio merged with Woodside to create a global top 10 independent energy company by production and the largest energy company listed on the ASX. 

The merger of BHP’s Petroleum assets with Woodside combines two great businesses that are better together.

The combined business is expected to have a high margin oil portfolio, long life LNG assets and the financial resilience to help supply the energy needed for global growth and development over the energy transition.

At 1 June 2022, the merged business was owned approximately 52 per cent by existing Woodside shareholders and 48 per cent by existing BHP shareholders.

Merging BHP’s Petroleum business with Woodside is expected to create a large, more resilient company, better able to navigate the energy transition and grow value while doing so. The merger will enable value and choice for BHP shareholders and unlock synergies in how these assets are managed.

The combined business is expected to have a high margin oil portfolio, long life LNG assets and the financial resilience to help supply the energy needed for global growth and development over the energy transition.

The merger is expected to deliver substantial value creation for both sets of shareholders across a range of areas including: 

• Greater scale and diversity of geographies, products and end markets 
• Resilient, high margin operating cash flows to fund shareholder returns and support the energy transition 
• Strong growth profile and capacity to phase the most competitive, high-return options 
• Proven management and technical capability from both companies 
• Shared values and focus on sustainable operations, carbon management and ESG leadership 
• Estimated synergies of more than US$400 million per annum 
• Greater financial resilience, relative to BHP’s and Woodside’s standalone Petroleum businesses
  
   

Oil and gas provide more than half of the world’s primary energy today. They remain essential to the processes and products that support everyday life. High-quality assets and projects are expected to continue to generate attractive returns for the next decade. The combined business is expected to be better able to fund investments that support the energy transition than two smaller, separate sets of assets. 

The merger positions the combined company to deliver the best shareholder and societal outcomes during the energy transition.

The merger provides value and choice for BHP shareholders. Since the announcement on 17 August 2021, the value of the transaction has grown. Woodside’s share price has risen from US$15.16 on 17 August 2021 to US$21.39 on 31 May 2022, following stronger oil and gas prices while both businesses have been performing well operationally. BHP shareholders share these benefits with Woodside shareholders.

Based on Woodside’s share price of US$21.39 at 31 May 2022, the implied value of BHP Petroleum is US$19.6 billion. At this valuation, an in specie dividend per BHP share was calculated as US$3.86, with US$1.66 of franking credits being distributed per BHP share.

This terminology refers to a dividend which is paid by way of assets (in this case, Woodside shares), instead of cash.

On 1 June 2022, BHP received 914,768,948 Woodside shares as consideration for the sale of BHP Petroleum. BHP determined a fully franked in specie dividend and distributed the Woodside shares on 1 June 2022. Further detail is available in the announcement.

With the merger complete, eligible BHP shareholders have received a dividend (in the form of Woodside shares as an in specie fully franked dividend). Like with all dividends, BHP shareholders will be subject to a taxing event when they receive these shares. 

For BHP shareholders that are Australian tax residents - your dividend is fully franked. The dividend of approximately A$5.38 (per BHP share) grossed up for franking credits of approximately A$2.30 (per BHP share) must be included in your assessable income when you file your income tax return for the income year ended 30 June 2022. The franking credits can generally be used to offset any tax payable on the dividend. Top up tax may arise for shareholders where the tax payable in relation to the dividend exceeds the franking credits attached. Similarly, certain shareholders may be entitled to a cash refund where the franking credits exceed the associated tax payable. 

Following the merger, Australian shareholders will have A$29.76 tax cost base for every Woodside share received. There will be no impact to the existing tax cost base of BHP shares for Australian shareholders as a result of the merger. 

For BHP shareholders that are not Australian tax residents, Australian withholding tax will not apply to the dividend. You should always obtain appropriate professional advice relevant to your circumstances. BHP dividend statements and Woodside holding statements are expected to be despatched in mid-June 2022. 
Detailed information on tax, for jurisdictions such as Australia, the US, UK and South Africa, is available in the exchange release, Update on BHP Petroleum and Woodside merger and share distribution information, lodged with the market on 8 April 2022. 

The ATO published its class ruling with respect to the merger on 6 July 2022:

• CR 2022/60 BHP Group Limited - dividend by way of in specie distribution of Woodside Energy Group Ltd shares
• CR 2022/60A1 - Addendum BHP Group Limited - dividend by way of in specie distribution of Woodside Energy Group Ltd shares

BHP shareholder will receive one Woodside share for every 5.5340 BHP shares they own, with any entitlement to a fraction of a share rounded down to the nearest whole share (for ASX and JSE shareholders). 

BHP dividend statements and Woodside holding statements are expected to be despatched in mid-June 2022. 

Woodside retains its primary listing on the Australian Securities Exchange (ASX) and will have a standard listing on the London Stock Exchange (LSE) and a sponsored Level III American Depository Receipt (ADR) program on the New York Stock Exchange (NYSE).

Normal trading of the new Woodside shares, American Depository Receipts or Depository Interests for BHP Shareholders will commence at different times and dates, depending on which exchange you hold your BHP (and therefore, your Woodside) shares. Normal trading will commence at market open in the corresponding time zones: on 2 June for the ASX and NYSE; and on 6 June for the LSE. 

Most BHP shareholders were eligible to have the Woodside shares distributed to them. 

However, there are certain jurisdictions where the distribution of Woodside shares by BHP is difficult or not permitted. 

If you were deemed ineligible to receive Woodside shares, your entitlement of shares has been transferred to the sale agent to be sold on your behalf, and you will be remitted with the cash proceeds under a share sale facility.  

Historical share prices are available on the Shareholder online services page.

BHP’s share price on the Australian Securities Exchange was adjusted downwards on the merger ex-dividend date of 24 May 2022 by A$5.24 per share (from A$47.80 to A$42.56), to reflect the implied value of the in specie dividend per BHP share based on Woodside’s share price on that date.