More speculation continues to trickle out into the market about a possible acquisition by Woodside of BHP’s petroleum business, with sources in the market now suggesting that a planned deal by the $22bn listed energy producer has considerably progressed and is on track to be announced in about three weeks.
There is a growing view in the market that the acquisition relates to BHP’s entire global petroleum business rather than only its assets in Australia, as some had earlier expected.
A number of sources are betting that the announcement will be made at Woodside and BHP’s upcoming results presentation.
BHP has shifted the announcement of its results to the close of market on August 17 and Woodside has moved its results announcement to August 18, from August 17.
The thinking among market participants is that this is too much of a coincidence and it is an additional signal that something between the pair is afoot.
As reported earlier by DataRoom, the suggestions in the market are that Woodside would pay for the BHP assets through its own scrip that would then be distributed to BHP’s shareholders.
Sources say Woodside has been actively working on the proposal – one that has been pitched to the $21bn Australian energy producer by investment bankers over the past year – as earlier tipped by this column.
This followed renewed suggestions in recent weeks that BHP has been looking to divest its global petroleum division in recent days.
Both BHP and Woodside have declined to comment.
Woodside and BHP are already joint venture partners on Australian assets, including the Scarborough gas field off Western Australia and the North West Shelf project.
BHP also owns valuable petroleum assets in other parts of the world, including the Gulf of Mexico, and collectively analysts estimate the entire portfolio is worth about $US15bn ($20.4bn).
This would imply a price of about five times earnings before interest, tax, depreciation and amortisation, which is what Woodside is currently trading on.
BHP also owns interests in the Macedon and Pyrenees domestic gas projects in WA with Santos that could be worth up to $US1bn.
Goldman Sachs has been working with BHP over solutions for the miner’s Australian oil and gas assets since 2019.
Market experts believe there would be few buyers for BHP’s petroleum business, other than Woodside, which would find the offering attractive at a time when industry groups need to build scale.
In a period of industry consolidation to create industry giants that can better fund project development, Santos is also attempting a $22bn mega merger with Oil Search.
Oil Search has rejected the merger on the grounds that the terms are not attractive to its shareholders.
However, frustration is said to be growing among some shareholders that Oil Search is refusing to engage with Santos in the hope of soliciting a higher offer.
Meanwhile, the market is rife with speculation over a potential deal between BHP and Woodside as final bids were received this week for BHP’s Australian coal assets.
There are suggestions that the US-based Peabody Energy, which counts Elliott Management as its main shareholder, is the frontrunner to buy the mines on offer.
Up for sale are BHP’s Mt Arthur thermal coal mine in NSW and two metallurgical coal mines in Queensland, held as part of an alliance agreement with Mitsui Coal known as BMC.
Working for BHP on the coal mines are Macquarie Capital, Goldman Sachs and UBS.
Woodside shares closed down 44c at $22.02.
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