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BHP and Woodside commit to merger

Published by , Assistant Editor
LNG Industry,

Woodside Petroleum Ltd (Woodside) and BHP Group (BHP) have entered into a merger commitment deed to combine their respective oil and gas portfolios by an all-stock merger to create a global top 10 independent energy company by production.

On completion of the transaction, BHP’s oil and gas business would merge with Woodside, and Woodside would issue new shares to be distributed to BHP shareholders. The expanded Woodside would be owned 52% by existing Woodside shareholders and 48% by existing BHP shareholders. The transaction is subject to confirmatory due diligence, negotiation, and execution of full form transaction documents, and satisfaction of conditions precedent including shareholder, regulatory, and other approvals.

With the combination of two high quality asset portfolios, the proposed merger would create the largest energy company listed on the ASX, with a global top 10 position in the LNG industry by production. 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 and BHP have developed a plan to targeted final investment decision (FID) for Scarborough (Australia) by the end of the 2021 calendar year, prior to the proposed completion date for the merger.

As part of this plan, Woodside and BHP have agreed an option for BHP to sell its 26.5% interest in the Scarborough Joint Venture to Woodside and its 50% interest in the Thebe and Jupiter joint ventures to Woodside if the Scarborough Joint Venture takes a FID by 15 December 2021. The option is exercisable by BHP in the 2H22 calendar year and if exercised, consideration of US$1 billion is payable to BHP with adjustment from an effective date of 1 July 2021. An additional US$100 million is payable contingent upon a future FID for a Thebe development.

Both the Woodside and BHP boards of directors confirm their support for the transaction. The merger is expected to be completed in 2Q22 of the calendar year with an effective date of 1 July 2021.

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Australia LNG news Current LNG projects