Woodside and BHP Group have today signed a binding share sale agreement (SSA) for the merger of BHP’s oil and gas portfolio with Woodside (Merger). Woodside will acquire the entire share capital of BHP Petroleum International Pty Ltd (BHP Petroleum) in exchange for new Woodside shares.

The signing of the SSA follows the merger commitment deed announced on 17 August 2021.

On completion, the Merger will create a global top 10 independent energy company by production and the largest energy company listed on the ASX. The combined company 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.

Woodside CEO Meg O’Neill said the Merger would deliver enduring value for Woodside shareholders and BHP shareholders that receive Woodside shares under the Merger.

“Woodside and BHP’s respective oil and gas portfolios and experienced teams are better together. The combination will deliver the increased scale, diversity and resilience to better navigate the energy transition.

“We will have the balance sheet, cash flow and financial strength to help fund planned developments in the near-term, invest in future energy opportunities and return value to our shareholders through the cycle.

“Our emissions reduction targets will apply to the combined portfolio, supporting our aspiration to be net-zero by 2050 and our strategy to supply lower-carbon energy to our customers across the globe,” she said.

Attractive strategic and financial rationale

• The Merger documented in the SSA today 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 through an attractive and long-life conventional portfolio
• Resilient, high margin operating cash flows to fund shareholder returns and business evolution to support the energy transition
• Strong growth profile with capacity to phase the most competitive, high-return options within the portfolio
• 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 (100 per cent basis, pre-tax) per annum from optimising corporate processes and systems, leveraging combined capabilities and improving capital efficiency on future growth projects and exploration
• Greater financial resilience, relative to Woodside’s and BHP’s standalone petroleum businesses

Merger ratio

On completion of the Merger, Woodside will issue new shares expected to comprise approximately 48% of all Woodside shares (on a post-issue basis) as consideration for the acquisition of BHP Petroleum. The Merger ratio is based on the number of Woodside shares at the effective date. The number of new shares issued on completion will be adjusted to reflect shares issued by Woodside under its dividend reinvestment plan after the effective date.

Completion is targeted for Q2 2022. Prior to completion, Woodside and BHP will carry on their respective businesses in the normal course and will put in place appropriate plans to enable a smooth transition of ownership.

KeyFacts Energy: Woodside Australia country profile