BHP Petroleum merger with Woodside on track for June 1

Based on Woodside’s share price of US$25.55 at April 6, the implied value of BHP Petroleum is US$23.4bn

The merger of BHP’s oil and gas portfolio with Woodside is on track for June 1, according to an update released today.

BHP is expected to receive 914.8mn newly issued Woodside Shares at completion and BHP shareholders are expected to be entitled to one Woodside Share for every 5.5340 BHP shares they hold on the record date. 

Based on Woodside’s share price of US$25.55 at April 6, the implied value of BHP Petroleum is US$23.4bn. At this valuation, which is subject to change, the in specie dividend would be US$4.62 with US$1.98 of franking credits being distributed per BHP share (US$10bn of franking credits in total).

Woodside will retain its primary listing on the ASX and is seeking a standard listing on the LSE and a sponsored Level III ADR program on the NYSE from completion of the merger. Woodside’s 2022 AGM, to approve the merger, is to be held at 10am (AWST) on May 19.

A share sale facility will be in place for eligible small BHP shareholders who elect to participate, and for shareholders who are ineligible to receive Woodside shares.

On completion of the merger, which was announced on August 17 last year and estimated to generate synergies of more than US$400mn a year, the combined company is expected to 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 will make a cash payment to BHP of approximately US$830mn in relation to cash dividends paid by Woodside between the merger effective date of July 1 2021 and completion. BHP will make a cash payment to Woodside for the net cash flow generated by BHP Petroleum, amounting to approximately US$900mn.

Meanwhile a consortium, led by the Global Maritime Forum and consisting of BHP, Rio Tinto, Oldendorff Carriers and Star Bulk Carriers Corp., recently signed a letter of intent (LOI) to assess the development of an iron ore Green Corridor between Australia and East Asia.

To mobilise demand for green shipping and to scale zero- or near-zero greenhouse gas emission shipping, governments and industry decision-makers are increasingly looking to simplify the task of decarbonising the maritime sector by establishing Green Corridors: specific shipping routes where the economics, infrastructure, and logistics of zero- or near-zero emission shipping are more feasible and rapid deployment can be supported by targeted policy and industry action. 

“Zero-greenhouse gas emission pathways require the creation of a parallel value chain that involves new ways of working, new contractual relationships, and drives the development of decarbonized fuel production and infrastructure," said CEO Johannah Christensen at the Global Maritime Forum. 

"This new iron ore green corridor collaboration is an important step towards enabling zero greenhouse gas emission shipping from both the supply and demand side.”

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