# BHP in talks to sell global oil, gas business to Australia’s Woodside Author: Pal Sinha, Barnali Author URL: https://financedigest.com/author/pal-sinha-barnali Published: 2021-08-16 Category: BUSINESS Category URL: https://financedigest.com/category/business Meta Title: BHP Group in Talks to Sell Petroleum Business to Woodside Petroleum Meta Description: BHP Group Ltd is discussing the sale of its petroleum business to Woodside Petroleum Ltd in exchange for shares. The deal could reshape the global energy URL: https://financedigest.com/bhp-in-talks-to-sell-global-oil-gas-business-to-australias-woodsidehtml ![undefined](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/2021-08-16t021423z1lynxmpeh7f02crtroptp4mining-conference-pdac-1-1736838014256-compressed.jpg) By Sonali Paul MELBOURNE (Reuters) – BHP Group Ltd is in talks to sell its petroleum business to Australia’s top independent gas producer Woodside Petroleum Ltd in exchange for shares, the companies confirmed on Monday. The world’s biggest miner also said it had begun a strategic review of its oil and gas business — made up of assets in Australia, the Gulf of Mexico, Trinidad and Tobago, and Algeria – that analysts value at between $10 billion and $17 billion. BHP has been facing calls to detail how and when it will exit [fossil fuels](https://www.financedigest.com/eu-approves-effective-ban-on-new-fossil-fuel-cars-from-2035.html "EU approves effective ban on new fossil fuel cars from 2035"). It has already sold some [coal assets](https://www.financedigest.com/nippon-steel-still-in-talks-with-teck-as-it-seeks-stake-in-coal-asset.html "Nippon Steel still in talks with Teck as it seeks stake in coal asset"). “While discussions between the parties are currently progressing, no agreement has been reached on any such transaction,” BHP said, adding that it was evaluating a number of options. The confirmation came after numerous media [reports about a possible deal](https://www.financedigest.com/australias-macquarie-explores-6-billion-deal-for-britains-mg-sky-news-reports.html "Australia’s Macquarie explores billion deal for Britain’s M&G, Sky News reports") ahead of BHP’s annual results on Tuesday and Woodside’s half-year results on Wednesday. For Woodside, an acquisition of BHP’s [oil and gas assets would roughly double](https://www.financedigest.com/big-oil-doubles-profits-in-blockbuster-2022.html "Big Oil doubles profits in blockbuster 2022") its annual underlying earnings to around $8 billion. For BHP, a petroleum exit would strip out just 5% of underlying earnings. A Think Big Woodside, merged with BHP Petroleum, would present a globally significant LNG weighted company, with a diversity of low risk geographic exposure and growth options,” [Credit Suisse](https://www.financedigest.com/some-credit-suisse-at1-bondholders-seek-legal-advice-law-firms.html "Some Credit Suisse AT1 bondholders seek legal advice -law firms") analyst Saul Kavonic said in a note. BHP’s assets would double Woodside’s annual [output to 200 million barrels of oil](https://www.financedigest.com/uk-oil-gas-firms-to-leave-years-worth-of-output-in-ground-with-tax-hikes-report.html "UK oil, gas firms to leave year’s worth of output in ground with tax hikes-report") equivalent. That would be [nearly twice the combined volume](https://www.financedigest.com/demand-for-hydrocracker-is-forecast-to-record-a-volume-cagr-of-nearly-7-through-2028.html "Demand for Hydrocracker Is Forecast to Record a Volume CAGR of Nearly 7% through 2028") produced by rivals Santos Ltd and Oil Search Ltd, which are set to merge. A deal would also remove the main obstacle to Woodside’s biggest growth project, the $12 billion Scarborough/Pluto Train 2 development, which BHP has [stalled amid protracted talks](https://www.financedigest.com/motor-racing-porsches-formula-one-plans-stall-as-red-bull-talks-collapse.html "Motor racing-Porsche’s Formula One plans stall as Red Bull talks collapse") over a gas processing fee. Woodside is engaged in [discussions with BHP regarding a potential merger involving BHP’s entire petroleum business](https://www.financedigest.com/ceo-riggs-eckelberry-of-originclear-discusses-the-power-of-intuition-in-running-a-successful-business.html "CEO Riggs Eckelberry of OriginClear Discusses the Power of Intuition in Running a Successful Business ") through a distribution of Woodside shares to BHP shareholders,” Woodside said in a statement. Woodside’s shares fell more than 4%, underperforming its closest rivals, on the prospect of a massive [share issue by the A$20 billion](https://www.financedigest.com/novartis-launches-new-11-billion-share-buyback.html "Novartis launches new billion share buyback") ($15 billion) company. BHP’s shares slipped 0.2%. Analysts said if BHP [shareholders end up with Woodside shares some would look to sell](https://www.financedigest.com/intercos-fund-shareholders-l-catterton-otpp-sell-6-stake-at-7-discount.html "Intercos fund shareholders L Catterton, OTPP sell 6% stake at 7% discount") them on concerns about holding a pure fossil fuel investment. They’re not all going to dump the stock, but there’s certainly an ESG overlay on [top of it,” said James](https://www.financedigest.com/james-trainor-top-fbi-cyber-expert-joins-aons-cyber-solutions-group.html "James Trainor, top FBI cyber expert, joins Aon’s Cyber Solutions Group") Hood, an analyst at Regal Funds Management, referring to environmental, social and governance issues. “That’s probably why the stock (Woodside) is weak today.” BHP shareholders would own 53% of the combined [group following a share](https://www.financedigest.com/saipem-shares-drop-group-says-cannot-explain-why.html "Saipem shares drop, group says cannot explain why") issue, CLSA estimated. CLSA analyst Daniel Butcher said BHP’s Gulf of Mexico assets would “open up entirely new growth avenues, relieving Woodside of its narrow focus on West Australia”, where it is totally dependent on the Scarborough/Pluto [Train 2 project](https://www.financedigest.com/prince2-and-msp-training-the-rise-of-online-project-management-courses.html "Prince2 and MSP Training: The Rise of Online Project Management Courses") for growth. “This would be genuinely transformational,” Butcher said in a note. ($1 = 1.3622 [Australian dollars)](https://www.financedigest.com/asian-stocks-make-7-month-highs-australian-dollar-gains-on-hot-inflation.html "Asian stocks make 7-month highs, Australian dollar gains on hot inflation") (Reporting by Sonali Paul; Additional reporting by Shashwat Awasthi in Bengaluru; editing by Uttaresh.V and Richard Pullin) --- This blog is powered by Superblog. Visit https://superblog.ai to know more. ---