petroleum, oil rig, sea

BHP Petroleum merger with Woodside

BHP has announced its intent to create a global top 10 independent energy company by production through an agreement to merge our Petroleum business with Woodside.

Merging BHP’s Petroleum assets with Woodside is expected to unlock synergies, increase value and choice for BHP shareholders and offer ongoing value through the energy transition.

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

The merged entity is expected to have:

  • Significant scale, with current production of around 200 million barrels of oil equivalent per year;
  • A portfolio of assets, with greater diversity by product, geography, and end market; and
  • A continued focus on sustainable operations, carbon management and ESG leadership.

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 and likely beyond. We are confident this decision positions the Petroleum business to deliver the best shareholder and societal outcomes during the energy transition. 

The merger will give shareholders greater choice about how to weight their exposure to the different investment and sector propositions. 

The merged company would be owned approximately 52 per cent by existing Woodside shareholders and 48 per cent by BHP shareholders and is expected to be completed during the second quarter of the 2022 calendar year.

The Transaction is subject to confirmatory due diligence, negotiation, Board approval and execution of full form transaction documents which is targeted for October 2021, and satisfaction of conditions precedent including shareholder, regulatory and other approvals.

Frequently asked questions

  • 1. What is happening to BHP’s Petroleum business?

    BHP has announced its intent to create a global top 10 independent energy company by production through an agreement to merge its Petroleum business with Woodside. With the combination of two high-quality asset portfolios, the proposed merger would create the largest energy company listed on the Australian Securities Exchange (ASX).

     

    The merged entity is expected to unlock synergies and increase value and choice for BHP’s shareholders. The combined business will be more resilient and offer ongoing value through the energy transition.

     

    The merger, which is subject to agreement and Board approval of transaction documentation, regulatory and other approvals, is expected to be completed during the second quarter of the 2022 calendar year. If approved, the merged company would be owned approximately 52 per cent by existing Woodside shareholders and 48 per cent by BHP shareholders.

  • 2. Why did BHP decide to separate its Petroleum business? 

    At BHP, we regularly review our portfolio to ensure our assets are owned in a way that maximises long-term shareholder value. Following a review, we have announced our intention to separate our Petroleum and Minerals businesses. Having made the decision to separate these parts of our business, we believe a merger of BHP Petroleum with Woodside delivers the most value for shareholders.

     

    The merger would give shareholders greater choice about how to weight their exposure to the different investment and sector proposition. It would accelerate BHP’s relative exposure to future facing commodities and allow a greater proportion of capital in BHP’s remaining portfolio to be allocated towards these future facing commodities and enhanced shareholder returns.

  • 3. What are the benefits of the merger?

    The merger of our Petroleum assets with Woodside is expected to create an organization with the scale, capability and expertise to better meet global demand for key oil and gas resources the world will need over the energy transition.

     

     

    The merged entity will to be a global top 10 independent energy company by production. It will bring together complementary skills, including exceptional operational and technical capability in deep-water oil and in LNG. And it is expected to have:

    • Significant scale, with current production of around 200 million barrels of oil equivalent per year;
    • A portfolio of assets, with greater diversity by product, geography and end market;
    • And a continued focus on sustainable operations, carbon management and ESG leadership.

     

  • 4. Why is BHP merging its Petroleum business with Woodside?

     

    We believe a merger of BHP Petroleum with Woodside would deliver the most value for shareholders. 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 and likely beyond. The question is not whether these resources have a role – but rather, how to position them to deliver the best shareholder and societal outcomes during the energy transition.

     

    The proposed merger would create a company with:

    • Significant scale, with current production of around 200 million barrels of oil equivalent per year;
    • Significant scale, with current production of around 200 million barrels of oil equivalent per year;
    • A continued focus on sustainable operations, carbon management and ESG leadership.

     

  • 5. Did you assess other options? Why not another option?
    We considered options for separation of our Petroleum business and are confident that the combined business created by the merger provides greater value to BHP shareholders than other options. 
  • 6. How will the merger work?
    During the 2022 financial year BHP will work with Woodside to formalise the transaction by negotiating a sales agreement and obtaining all relevant transaction, regulatory and other approvals. Once approved, BHP shareholders will own approximately 48 percent of Woodside, and will receive shares in Woodside as part of the transaction. 
  • 7. What are the terms of the transaction?
    Under the proposed transaction, Woodside, or a wholly owned subsidiary of Woodside, will acquire 100 per cent of the issued share capital of BHP Petroleum International Pty Ltd in exchange for shares in Woodside which would deliver approximately 48 per cent to BHP shareholders on completion. Woodside shares are expected to be immediately distributed to BHP shareholders. 
  • 8. What is the anticipated closing date?
    The merger, which is subject to negotiation and Board approval of transaction documents, regulatory and other approvals, is expected to be completed during the second quarter of the 2022 calendar year.