PERTH (miningweekly.com) – Oil and gas major Woodside on Friday released supporting information ahead of a shareholder vote on May 19 concerning the merger of major BHP’s oil and gas portfolio with Woodside.

The two companies in November last year struck an agreement to combine their respective oil and gas portfolios through a stock merger. The expanded Woodside would be owned 52% by existing Woodside shareholders and 48% by existing BHP shareholders.

Completion of the merger is on track for June 1, subject to the satisfaction of conditions precedent, and BHP is expected to receive 914.8-million newly issued Woodside shares at completion.

BHP shareholders are expected to be entitled to one Woodside share for every 5.5340 BHP shares they hold on the record date, and based on Woodside’s share price of $25.55 on April 6, the implied value of BHP Petroleum is $23.4-billion. 

Woodside on Friday released the independent expert’s report, which concluded that the merger would be in the best interest of shareholders, in the absence of a superior proposal.

The independent expert, KPMG valued Woodside’s current business at between $16.9-billion to $19.4-billion, equating to a share price of between A$23.09 and A$26.42. The combined company is expected to have a value of between $37.2-billion and $42.3-billion, equating to a value per share of between A$26.25 and A$29.81.

Woodside said on Friday it expects to achieve its target of more than $400-million in cost savings from combining the two groups by early 2024, including cutting executive jobs and other staff, but said carrying out the changes would require one-off costs of up to $600-million in the first two years.

The proposed merger would create the largest energy company listed on the ASX, with a global top 10 position in the liquefied natural gas (LNG) industry by production, with the merged entity having delivered 200-million barrels of oil equivalent in the 2021 financial year.

The combined company will have a high margin oil portfolio, long-life LNG assets and the financial resilience to help supply the energy needed for global growth and development over the energy transition, the two companies said in a joint statement.

The merged company will have a diversified production mix of 46% LNG, 29% oil and condensate and 25% domestic gas and liquids, as well as a wide geographic reach with production from Western Australia, east coast Australia, US Gulf of Mexico, and Trinidad and Tobago with approximately 94% of production from OECD nations. Furthermore, the enlarged Woodside would have 2P reserves of over two-billion barrels of oil equivalent comprising 59% gas, and 41% liquids.