Mega-deal first job for Woodside’s new CEO Meg O’Neill
Meg O’Neill will lead Woodside after it announced a blockbuster $40bn merger with BHP’s petroleum arm
Woodside Petroleum’s newly appointed boss Meg O’Neill said her first day would take some beating.
“This is a pretty good day while I try to figure out what day two is going to look like,” Ms O’Neill told The Australian. “It’s not every day you get to announce a very significant merger like this.”
Very significant may even be under-stating it. The $40bn mega merger with BHP for its petroleum arm will in one fell swoop double both Woodside’s production and market capitalisation and hand it stakes in oil and gas assets spanning the globe.
The US executive, who spent the bulk of her career at US major ExxonMobil, only joined Woodside three years ago but now has the chance to refashion the Perth producer into a major player on the global stage.
“I’m incredibly excited. Looking back over Woodside history, I’m the sixth CEO and when I reflect on where this company’s been on the journey we’ve been on, we’ve accomplished some amazing things over the course of our 60 plus years and I look forward to leading the team into the future. I’m very excited.”
Rumours of a potential tie-up have been circulating in the oil and gas sector since early this year when Woodside made the bizarre decision to allow former boss Peter Coleman to leave ahead of schedule after a ten year stint, without announcing a permanent replacement in its top job.
In his place stepped Ms O’Neill who immediately impressed both the company’s staff and investors alike even as rumours swirled that BHP’s own Geraldine Slattery may take on the top job in her place.
Ms O’Neill quickly moved to make changes to the company’s corporate culture by encouraging employees to move more freely around the building including the top levels reserved for its most powerful executives.
As part of changes, executive floors which previously required special swipe card entry would be open to all employees.
The move was a nod to unrest among some Woodside staff and investors that the company under Mr Coleman could have done more to develop the company’s corporate culture.
Now an even bigger challenge awaits. Multiple hurdles to get the deal over the line await including a shareholder vote which will require 50 per cent approval and a long awaited growth option to develop its $16bn Scarborough gas project offshore Western Australia.
Ms O’Neill said she will keep the course on a controversial decision to process Scarborough through a expanded Pluto LNG plant rather than running the gas into the North West Shelf.
“We are firmly committed to progressing Scarborough and Pluto train 2 towards that final investment decision in 2021. For a number of technical commercial, and ultimately economic reasons, we think that is the best decision for our shareholders.”
Woodside will also gain greater control over the notoriously niggly North West Shelf LNG plant in WA which currently has six different equity partners.
“The North West Shelf does become interesting in going from six to five and I think that will give us a little more kind of room to get things done. It’s always been difficult with six parties trying to get consensus so hopefully we’ll be able to continue to unlock value in the North West shelf and attract additional resource owners to process their gas through that facility.”
There may also be some disquiet within Woodside’s workers out at its project sites whether the merger may represent a form of takeover by BHP.
But Ms O’Neill said the two teams knew each other well and would be a united team.
“One of the key points of the transaction and the key benefits is we‘re getting the opportunity to bring two world class teams together. So we have a Woodside team that’s got a very strong WA orientation and we of course do have other international projects now. But BHP Petroleum has a tremendous team that’s got a lot of experience in Australia as well as the Gulf of Mexico and other jurisdictions. I think that’s one of the real benefits of the merger is bringing those outstanding teams together.”
One of its biggest shareholders Allan Gray already threatened to oppose a deal earlier this week.
Still, Ms O’Neill said she expects strong support from its investor base.
“It’s a very compelling story and the way the merger ratio was developed is one that’s very fair to both companies.”
“The beauty is it’s not linked to any particular oil price and it’s not linked to any particular share price. We’ve tested the merger ratio across a number of different sensitivities and the merger ratio is very sticky, as 52 to 48.”
The merged company will double Woodside’s production to 200m barrels of oil equivalent and reserves topping 2bn boe while it expects annual synergies of more than $US400m.
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