Woodside Petroleum pushes on with job cuts amid BHP deal
Woodside Petroleum is pushing ahead with job cuts while finalising a merger deal with BHP Petroleum
Woodside Petroleum is poised to make further job cuts as part of an ongoing restructure and will broaden a cost savings target across the merged business should its $40bn deal with BHP Petroleum proceed.
Several hundred jobs could be axed from its Perth headquarters in the next few weeks, sources told The Australian, in addition to at least 80 roles that were shed in July.
While oil is trading at multi-year highs above $US85 a barrel with spot LNG prices also soaring, the looming cuts are part of a broader three-year plan to remove nearly a third of business costs and create a lower-cost producer.
Woodside said it was still progressing the restructuring plan but would not confirm if any positions at the Perth-based company were under threat.
“We are very much planning all of our activities on a success case for the merger. But of course if there’s things that we can do before, that are no regrets, we do that,” Woodside chief financial officer Sherry Duhe told The Australian.
Asked if job cuts were imminent, Ms Duhe said: “I know there’s market speculation around those things that probably goes back several months, but I can’t confirm any of those speculations. That’s just been gossip going around.”
Woodside first disclosed the cost savings target scheme in November 2020 under former boss Peter Coleman and it has remained in place under his successor, Meg O’Neill, including plans for a redesign of the organisation and an “enabled” workforce.
While Woodside is still working through sealing its blockbuster merger with BHP Petroleum, Ms Duhe said it would apply the low cost model across the merged company as part of the integration of the two businesses.
“If you think about the 30 per cent, the team is still very much progressing well on those plans which are all about being leaner, nimbler, more efficient and more effective as an organisation,” Ms Duhe said.
“But as you can imagine now that we’ve announced this merger, what we’re actually doing is taking those plans and widening them to start to design out what does a combined Woodside-BHP portfolio look like and how can we have the most effective IT systems in place and simplest and most effective work practices.
“Then what comes out of that is starting to design out what does the organisation structure look like and what does staffing look like. We’ve still got quite a bit of work to do on that front.”
Ultimately, the broader efficiency drive will work its way through the BHP Petroleum business once the deal completes.
“We are progressing very well on a Woodside stand-alone basis towards those (cost) targets, but again it becomes a merged plan going forward together with BHP assuming success, which we are planning for,” Ms Duhe said.
“Thinking about our people – and how we work together – we want to plan that as a merged entity.”
Woodside’s corporate and legal head, Daniel Kalms, is leading the BHP integration process while Niall Myles is leading the organisational review known internally as Woodside Transform.
Seven Woodside executives have travelled to BHP Petroleum’s headquarters in Houston since the deal was announced in August and spent a month inside the business of the resources giant.
“They spent about a month over there and they’re just back and we’ve got fully fledged transition teams working together with BHP,” Ms Duhe said.
A share sale agreement and integration contract for the merger with BHP‘s petroleum arm is expected in November ahead of targeted completion in the second quarter of 2022.
BHP told shareholders on Tuesday they will get a close look at the details of the sale of its petroleum assets by the end of November, and the pair remaining locked in discussion over the final terms of the all-scrip deal.
The merger terms suggest the pair will make a final investment decision on the $16bn Scarborough gas project by December 15, with the two agreeing BHP will sell its interest in the gas field to Woodside if a tie-up does not go ahead.
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