BHP Billiton moves toward oil and gas exports through Woodside merger negotiations

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BHP Group PLC update

BHP Billiton has begun negotiations on the potential merger of its oil division with Australia’s Woodside, a move that will mark the withdrawal of the world’s largest mining group from the oil and gas industry.

BHP Billiton, which is listed in London and Sydney, said on Monday that the merger with Woodside was one of many options being considered Strategic review Its petroleum business. It added that any agreement to merge its oil and gas assets in Australia, North America and Africa with Woodside could result in the distribution of shares in the Perth-based energy group to BHP Billiton shareholders.

“Although discussions between the two parties are currently ongoing, no agreement has been reached on any such transactions. BHP Billiton stated that it will issue further announcements in due course.

Bernstein analysts estimate that BHP Billiton’s oil and gas division may be worth $13 billion.

BHP Billiton’s decision to review its oil business comes as major mining companies are under pressure to reduce exposure to fossil fuels and to align with the Paris climate agreement goals.

Owning oil units means BHP Billiton stand out Among its pure mining counterparts. However, aging oil fields and the loss-making US shale business sold in 2018 caused oil production to drop from 235 million barrels in 2013 to approximately 103 million barrels in the 12 months ending in June, or 280,000 barrels per day.

Credit Suisse believes that BHP Billiton will choose to sell its entire fossil fuel business, including its petroleum division, after a strategic assessment.

“Oil is no longer suitable for BHP Billiton’s investment portfolio or future-oriented strategy. The Swiss bank analyst Saul Kavonic said that after waiting too long to spin off thermal coal, he now has to resort to US dollar-denominated cent sales. BHP Billiton should Know that it is best to withdraw from oil as soon as possible.

He added that BHP Billiton may find buyers for its Gulf of Mexico and Trinidad oil operations, but Woodside may be the only reliable buyer of its Australian assets. Kavonic said that if Woodside merges with BHP’s oil business, it will become an important global player in the LNG field.

The Australian Financial Review, which first reported on the merger negotiations, said Geraldine SlatteryOver the weekend, BHP Billiton’s global oil director flew to Perth to meet with Woodside’s acting CEO Meg O’Neill.

Woodside is an oil and gas producer listed on the Australian Stock Exchange with a market capitalization of 20 billion Australian dollars (14.7 billion US dollars). It co-owns important natural gas assets in Western Australia with BHP Billiton and several other companies.

After the talks were reported, Woodside’s stock price fell by more than 4%. BHP Billiton’s shares traded in Sydney rose more than 1%.

The negotiations between BHP Billiton and Woodside took place after the merger protocol The collaboration between Oil Search and Santos, an oil and gas company listed in Australia this month, underscores the trend of consolidation in the industry.

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