petroleum, oil rig, sea

BHP Petroleum merger with Woodside

We’re merging BHP’s Petroleum business with Woodside to create a global top 10 independent energy company by production.

Merging BHP’s Petroleum assets with Woodside is expected to unlock synergies, create scale and high returning options through the energy transition, and offer value and choice for BHP shareholders.

BHP and Woodside have signed a binding agreement to merge BHP’s oil and gas portfolio with Woodside to create a global top 10 independent energy company by production and the largest energy company listed on the ASX. 

On completion, the merger of BHP’s Petroleum assets with Woodside will combine two great businesses that are better together.

The combined business will 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 proposed merger is expected to deliver substantial value creation for both sets of shareholders from 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 at least 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 proposed merger will also give shareholders greater choice about how to weight their exposure to the different investment and sector propositions.

Merger details

BHP and Woodside have signed a binding share sale agreement that will see Woodside acquire BHP’s petroleum portfolio in exchange for new Woodside shares.

Key points include:

  • Merger ratio – on completion, the merged business will be owned approximately 52 per cent by existing Woodside shareholders and 48 per cent by BHP shareholders.
  • Distributing shares – on completion, new Woodside shares (expected to comprise approximately 48% of all Woodside shares post issue) will be distributed to BHP shareholders. The new Woodside shares will be distributed to BHP shareholders as an in-specie fully franked dividend (see Q&A for more information).
  • Timing – completion is targeted for the second quarter of the 2022 calendar year. The effective date of the merger will be 1 July 2021. Prior to completion, BHP and Woodside will carry on their respective businesses in the normal course and, will develop appropriate plans to enable a smooth transition of ownership.
  • Process and approvals – completion of the merger is subject to approval by certain regulatory and competition authorities, approval by Woodside shareholders and completion of other conditions customary for a transaction of this nature.
  • Woodside listings - Woodside will retain its primary listing on the Australian Securities Exchange (ASX). Woodside is currently pursuing a secondary listing on the New York Stock Exchange (NYSE) through an American depository receipt (ADR) arrangement, with a target of being active by completion. Additional secondary listings are being evaluated.

Frequently asked questions

  • 1. What is happening with the BHP petroleum business and Woodside merger?

    BHP and Woodside have signed a binding agreement to merge BHP’s oil and gas portfolio with Woodside to create a global top 10 independent energy company by production and the largest energy company listed on the ASX. 


    On completion, the merger of BHP’s Petroleum assets with Woodside will combine two great businesses that are better together.


    The combined business will 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.


    Completion is targeted for the second quarter of the 2022 calendar year. On completion, the merged business will be owned approximately 52 per cent by existing Woodside shareholders and 48 per cent by BHP shareholders.


    Completion of the merger is subject to approval by certain regulatory and competition authorities, approval by Woodside shareholders and other conditions customary for a transaction of this nature.

     
  • 2. Why is BHP merging its petroleum business with Woodside?

    Merging BHP’s petroleum business with Woodside creates 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.

  • 3. What are the benefits of the merger?

    On completion, the merger of BHP’s Petroleum assets with Woodside will combine two great businesses that are better together.

    The combined business will 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 proposed merger is expected to deliver substantial value creation for both sets of shareholders from 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 proposed merger positions the combined company to deliver the best shareholder and societal outcomes during the energy transition.

  • 4. How will the merger work? What are the key terms?

    BHP and Woodside have signed a binding share sale agreement that will see Woodside acquire BHP’s petroleum portfolio in exchange for new Woodside shares.


    Key points include:

    • Merger ratio – on completion, the merged business will be owned approximately 52 per cent by existing Woodside shareholders and 48 per cent by BHP shareholders.
    • Distributing shares – on completion, new Woodside shares (expected to comprise approximately 48% of all Woodside shares post issue) will be distributed to BHP shareholders. The new Woodside shares will be distributed to BHP shareholders as an in-specie fully franked dividend (see Q&A for more information).
    • Timing – completion is targeted for the second quarter of the 2022 calendar year. The effective date of the merger will be 1 July 2021. Prior to completion, BHP and Woodside will carry on their respective businesses in the normal course and will develop appropriate plans to enable a smooth transition of ownership.
    • Process and approvals – completion of the merger is subject to approval by certain regulatory and competition authorities, approval by Woodside shareholders and completion of other conditions customary for a transaction of this nature.
    • Woodside listings - Woodside will retain its primary listing on the Australian Securities Exchange (ASX). Woodside is currently pursuing a secondary listing on the New York Stock Exchange (NYSE) through an American depository receipt (ADR) arrangement, with a target of being active by completion. Additional secondary listings are being evaluated.
     
  • 5. Will Woodside shares be issued to BHP shareholders once the merger is complete?

    Yes, on completion of the merger, new Woodside shares (expected to comprise approximately 48% of all Woodside shares post issue) will be distributed to BHP shareholders. The shares will be distributed as an in-specie fully franked dividend. 

  • 6. What’s an in specie fully franked dividend?

    It is expected the new Woodside shares will be distributed to BHP shareholders as an 'in-specie fully franked dividend'. This terminology refers to a dividend which is paid by way of assets (in this case, Woodside shares), instead of cash. 

  • 7. Will there be any tax implications for BHP shareholders when they receive Woodside shares?

    On completion of the merger, BHP shareholders will receive a dividend (in the form of Woodside shares as an in-specie fully franked dividend – see above explanation).

    Like with all dividends, BHP shareholders will be subject to a taxing event when they receive the Woodside shares.


    For BHP shareholders who are Australian tax residents
    - the dividend (Woodside shares) grossed up for franking credits must be included in your assessable income.

    The franking credits can be used to offset any tax payable on the dividend. 


    For BHP shareholders who are non-Australian
    - the dividend (Woodside shares) will not be subject to Australian withholding tax. 

    Demerger relief will not be available for BHP or BHP shareholders. You should always obtain appropriate professional advice relevant to your circumstances.

     
  • 8. What’s the anticipated timing?

    Completion of the merger is targeted for the second quarter of the 2022 calendar year. 

  • 9. What’s the process from here?  

    Completion of the merger is subject to approval by certain regulatory and competition authorities, approval by Woodside shareholders and other conditions customary for a transaction of this nature.

  • 10. Will there be a BHP shareholder vote for the merger?

    A BHP shareholder vote is not required in Australia or in the UK.  However, the ASX Listing Rules require Woodside to carry out a shareholder vote due to the number of shares that it is issuing. 

     

    We believe the petroleum Woodside merger is in the best interests of BHP's shareholders and is expected to deliver substantial value creation.

     

    BHP continues to seek feedback from shareholders on our Petroleum merger with Woodside in forums such as the AGM, shareholder Q&A sessions and other engagements.

     
  • 11. Did BHP assess other options for its petroleum business?

    We considered options for separation of our Petroleum business and are confident that the combined business created by the merger will provide greater value to BHP shareholders than other options.

     

    An alternative option carefully considered by the Board was to implement a demerger through a distribution to shareholders of shares in a newly listed entity. However, while a demerger would be expected to result in a strong and financially viable stand-alone entity, the Board determined that the merger was the best alternative for shareholders.