Global miner BHP, Woodside petroleum confirm $40bn asset merger talks. BHP is planning a major change, simplifying its company structure, and merging its oil and gas assets into Woodside petroleum.

It will benefit Woodside petroleum creating one of the biggest energy producers in the world. BHP’s profit climbed 42% to reach $US 11.3bn in the year to the end of June. It was driven by record margins of 64% on iron ore from Pilbara mines.

WHY BHP IS PLANNING TO MERGE WITH WOODSIDE PETROLEUM?

On Tuesday, BHP declared a bumper profit due to high iron ore prices, as it announced to bring its UK and Australian arms together and leave the London stock exchange, which could have complications for investors. 

Woodside Chief Executive Meg O’Neill said in a statement. “Merging Woodside with BHP’s oil and gas business delivers a stronger balance sheet, increased cash flow and enduring financial strength to fund planned developments in the near term and new energy sources into the future,”

 “The proven capabilities of both Woodside and BHP will deliver long-term value for shareholders through our geographically diverse and balanced portfolio of tier 1 operating assets and low-cost and low-carbon growth opportunities.”

However, planning to tip its oil and gas assets into Perth-based Woodside as early as mid-next year, the BHP Chief Executive, Mike Henry insisted it was ‘’ not at all’’ related to BHP’s ambitious target to reduce carbon emissions by 30%. 

The CEO BHP Mike Henry said the merger has been done to provide value to shareholders, and also future proof business for predictable global demand. 

“The merger of our petroleum assets with Woodside will create an organization with the scale, capability, and expertise to meet global demand for key oil and gas resources the world will need over the energy transition,” Mr. Henry said.

“Bringing the BHP and Woodside assets together will provide choice for BHP shareholders, unlock synergies in how these assets are managed and allow capital to be deployed to the highest quality opportunities.”

As part of the new deal, new Woodside would be 52 percent owned by Woodside shareholders and 48 percent owner by existing BHP shareholders. 

Michael Allen, an accountant and former mining executive who is now treasurer of advocacy group Sustainable Energy Now, said,

“Woodside has had a strategic problem for a while because their future’s looking grim,”  

However, the BHP deal would give Woodside petroleum $15 of operating assets that could bring in money in the short term. 

He added, “It’s one thing to have a project that’s in operation now, it’s another thing to go off to people who believe in ESG [environmental, social and governance] and ask them to invest in this project that’s going to destroy the world”.