BHP and Woodside are MergingBy Antonio Trujillo | Mon, 08/23/2021 - 13:28
Australian company BHP, whose operations in Mexico include the renowned Trion Project in the Gulf, is merging with gas company Woodside Petroleum for USD$20 billion to form one of the world’s largest oil companies.
Both companies announced Tuesday that they were entering into this merger commitment that will see their oil and gas portfolios combined in an “all-stock” merger. This transaction is expected to make the resulting company the number 10 in the world by production in the energy industry.
On completion, BHP’s business in oil and gas includes developments in Trinidad and Tobago, Australia, Algeria, and Trion in Mexico, will merge with Woodside’s and the latter company would start issuing more shares to be distributed to BHP shareholders. In regards to ownership, BHP would own 48 percent of shares and Woodside, 52 percent. In the announcement, the companies made it clear that the transaction was still to be finalized, “subject to confirmatory due diligence, negotiation and execution of full form transaction documents.”
The merger will bring very promising advantages for investors of both companies. Amongst the reasons cited, greater scale of geographies, products, and markets; competitive high-return options in the portfolio, and “proven management and technical capability from both companies” are the most notable.
Meg O’Neill, Woodside CEO, commented that the merger “delivers a strong balance sheet, increased cash flow and enduring financial strength,” which is instrumental in funding future projects and developments, more importantly, those dealing with green, low-cost, and low-carbon energies, especially because of Woodside’s promise to be carbon neutral by the year 2050.
Moreover, O’Neill added that the companies’ proven capabilities are of great value to shareholders and capable of delivering satisfactory returns. These promises to investors are of great importance, given that the yet-to-be approved merger will be decided by investors and regulators.
BHP Chief Executive Mike Henry said the merger would give the organization the possibility to meet global demand for oil & gas resources, whilst giving investors a choice in asset management, capital expenditure, and growth optionality.
Though the merger includes terms to sell shares of certain assets, the Trion Project in Mexico, alongside Calypso in Trinidad, Wildling in the US, and Browse in Australia will remain wholly part of the resulting organization, pointing out their significant potential growth and multiple exploration opportunities.