Cur­tis Williams

cur­tis.williams@guardian.co.tt

In a ma­jor move that could have im­pli­ca­tions for T&T, Aus­tralian out­fits Wood­side Pe­tro­le­um Ltd (“Wood­side”) and BHP Group (“BHP”) have en­tered in­to a merg­er that will com­bine their re­spec­tive oil and gas port­fo­lios by an all-stock merg­er to cre­ate a glob­al top 10 in­de­pen­dent en­er­gy com­pa­ny by pro­duc­tion.

BHP has be­come a ma­jor play­er in T&T's oil and gas in­dus­try with it be­ing the op­er­a­tor in T&T's largest deep-wa­ter ex­plo­ration cam­paign.

BHP is al­so the on­ly com­pa­ny to have made a ma­jor oil dis­cov­ery in the last 20 years in T&T when it found the An­gos­tu­ra field and An­gos­tu­ra play in shal­low wa­ters off To­co.

In a me­dia re­lease the two Aus­tralian out­fits said up­on 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 per cent by ex­ist­ing Wood­side share­hold­ers and 48 per cent 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 as­set port­fo­lios, the pro­posed merg­er would cre­ate the largest en­er­gy com­pa­ny list­ed on the Aus­tralian Stock Ex­change (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" the re­lease not­ed.

Ac­cord­ing to the com­pa­nies the com­bi­na­tion of Wood­side and BHP’s oil and gas busi­ness is ex­pect­ed to de­liv­er sub­stan­tial val­ue cre­ation for both sets of share­hold­ers from across a range of ar­eas, in­clud­ing greater scale and di­ver­si­ty of ge­o­gra­phies, prod­ucts and end mar­kets through an at­trac­tive and long-life con­ven­tion­al port­fo­lio. Re­silient, high mar­gin op­er­at­ing cash flows to fund share­hold­er re­turns and busi­ness evo­lu­tion to sup­port the en­er­gy tran­si­tion.

Re­ports are that the move was made as BHP was un­der pres­sure to re­duce its car­bon foot­print by share­hold­ers con­cerned by glob­al warm­ing.

It is an­oth­er sign that oil and gas com­pa­nies are be­ing forced to move away from hy­dro­car­bons and shows that T&T's main source of for­eign ex­change re­mains un­der sig­nif­i­cant threat.

BHP is al­so cru­cial to T&T's nat­ur­al gas pro­duc­tion with its deep-wa­ter dis­cov­er­ies, Ca­lyp­so, and Le Clerc cru­cial to this coun­try's nat­ur­al gas pro­duc­tion post 2025.

The Aus­tralian com­pa­nies said they had shared val­ues and a fo­cus on sus­tain­able op­er­a­tions, car­bon man­age­ment and ESG lead­er­ship

"Es­ti­mat­ed syn­er­gies of more than US$400 mil­lion (100 per cent ba­sis, pre-tax) per an­num from op­ti­mis­ing cor­po­rate process­es and sys­tems, lever­ag­ing com­bined ca­pa­bil­i­ties and im­prov­ing cap­i­tal ef­fi­cien­cy on fu­ture growth projects and ex­plo­ration." the re­lease read.

Wood­side CEO and Man­ag­ing Di­rec­tor Meg O’Neill said, “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."

BHP CEO Mike Hen­ry added, “The merg­er of our pe­tro­le­um as­sets with Wood­side will cre­ate an or­gan­i­sa­tion with the scale, ca­pa­bil­i­ty and ex­per­tise to meet glob­al de­mand for key oil and gas re­sources the world will need over the en­er­gy tran­si­tion."

On a pro­for­ma ba­sis, the com­bined busi­ness will con­sist of:

High qual­i­ty con­ven­tion­al as­set base pro­duc­ing around 200 MM­boe (FY21 net pro­duc­tion)

Di­ver­si­fied pro­duc­tion mix of 46% LNG, 29% oil and con­den­sate and 25% do­mes­tic gas and liq­uids (FY21 net pro­duc­tion)

Wide ge­o­graph­ic reach with pro­duc­tion from West­ern Aus­tralia, east coast Aus­tralia, US Gulf of Mex­i­co, and Trinidad and To­ba­go with ap­prox­i­mate­ly 94% of pro­duc­tion (FY21 net pro­duc­tion) from OECD na­tions

2P re­serves of over 2 bil­lion boe com­pris­ing 59% gas, and 41% liq­uids.

Re­silient op­er­at­ing cash flows to fund share­hold­er re­turns and busi­ness evo­lu­tion to sup­port the en­er­gy tran­si­tion

Longer term em­bed­ded op­tions in­clude the Wildling (US), Tri­on (Mex­i­co), Ca­lyp­so (Trinidad and To­ba­go) and Browse (Aus­tralia) projects.