Insights

BHP (ASX:BHP) and Woodside (ASX:WPL) shares on watch amid petroleum merger update

BHP and Woodside’s merger has taken a big step forward…
The post BHP (ASX:BHP) and Woodside (ASX:WPL) shares on watch amid petroleum merger update appeared first on The Motley Fool Australia. –

The BHP Group Ltd (ASX: BHP) share price and the Woodside Petroleum Limited (ASX: WPL) share price will be on watch on Tuesday.

This follows the release of a joint announcement after the market close on Monday.

Why are BHP and Woodside shares on watch?

BHP and Woodside shares could be on the move today after they provide an update on their plans to create a global energy company. According to the release, the two parties have signed a binding share sale agreement (SSA) for the merger of BHP’s oil and gas portfolio with Woodside.

This will see Woodside acquire the entire share capital of BHP Petroleum in exchange for new Woodside shares. The signing of the SSA follows the merger commitment deed announced on 17 August.

The release highlights that, on completion, the merger will create a global top 10 independent energy company by production and the largest energy company listed on the Australian share market.

Furthermore, 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.

Management also estimates that the merger will unlock synergies of more than US$400 million pre tax. This will be from optimising corporate processes and systems, leveraging combined capabilities. and improving capital efficiency on future growth projects and exploration.

BHP’s CEO, Mike Henry, believes the company’s petroleum business and Woodside are better together and expects it to create value for BHP shareholders.

He said: “Merging our petroleum business with Woodside creates a large, more resilient company, better able to navigate the energy transition and grow value while doing so. Through the merger we will provide value and choice for BHP shareholders, and unlock synergies in how these assets are managed.”

What’s next?

Completion of the merger is targeted for the second quarter of the 2022 calendar year. Prior to completion, BHP and Woodside will carry on their respective businesses in the normal course. However, they will put in place appropriate plans to enable a smooth transition of ownership. The effective date of the merger will be backdated to 1 July 2021.

Upon completion, Woodside will issue new shares to BHP shareholders which are expected to comprise approximately 48% of all Woodside shares (on a post-issue basis) as consideration for the acquisition of BHP Petroleum.

However, while BHP has agreed to exclusivity arrangements with Woodside, these arrangements do not restrict BHP from considering superior proposals for BHP Petroleum. Though, a termination fee of US$160 million is payable in certain circumstances if the merger does not complete.

Scarborough given the go-ahead

Finally, BHP also released an announcement relating to the development of the Scarborough upstream project located in the North Carnarvon Basin, Western Australia.

According to the release, BHP has approved US$1.5 billion in capital expenditure for phase 1 of the development.  Final investment decisions have also been made by Woodside and the Scarborough Joint Venture.

Mr Henry commented: “Scarborough will be amongst the lowest carbon incremental sources of LNG to world markets. Scarborough will provide a reliable source of LNG for global customers and secure gas supply for the domestic market, as well as ongoing employment in Western Australia. Scarborough will provide important cash flows and value for shareholders of the enlarged Woodside.”

The post BHP (ASX:BHP) and Woodside (ASX:WPL) shares on watch amid petroleum merger update appeared first on The Motley Fool Australia.

Should you invest $1,000 in BHP right now?

Before you consider BHP, you’ll want to hear this.

Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now… and BHP wasn’t one of them.

The online investing service he’s run for nearly a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.

*Returns as of August 16th 2021

More reading

5 things to watch on the ASX 200 on Tuesday

2 top ASX shares to buy right now

Why this mining analyst is upbeat on the iron ore price forecast

These are the 10 most shorted ASX shares

Fortescue’s push to axe diesel subsidies could cost ASX miners billions

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

Trade The World Anywhere & Anytime!

Mobile app platform with over 50,000 global listed securities across 12 markets (over 70% global market capitalisation), right from your Android or iOS device.

Integrated with exclusive trading idea and investment analysis tools to help you find actionable insight on virtually every financial instrument across our 12 global markets, to help you optimise your trading strategies.

Refer Your Friends

Tell your friends about Monex and gift them FREE access to our trading tools.

We respect your privacy and will only send this one email notification to your friends. 

Share With Your Friends

Share on facebook
Share on twitter
Share on linkedin

Monex Trading Tools Access and Usage Terms

The Monex Trading Tools (referred to as ‘tools’ hereafter) are available to you inside your client portal;


To activate access to the tools, you must have a verified and approved trading account and have made a deposit of at least AUD $1000.


An active and funded account with a positive trading balance is required to continue to have access to the tools;


Although the tools are available to you indefinitely, Monex Securities may at it’s discretion disable access to the tools in the future;


Monex securities reserves the right to change these terms and conditions from time to time, as it sees fit, without notice.

Important Notice
iOS & Android App - 12 International Markets & Over 70% Global Market Cap. $0 Brokerage On US Trades. Click Here!