Woodside is in advanced talks to buy BHP Group’s petroleum division for about A$20 billion ($14.7 billion). BHP’s oil operations in the Gulf of Mexico (GoM) complements Woodside’s deepwater capabilities and add a new core focus area to Woodside’s existing portfolio. BHP has recently sanctioned US$800 million of new investment at the Shenzi hub in the GoM and is progressing the Trion project in Mexico. Strong cash flow from BHP’s GoM assets over the next decade will provide steady shareholder returns while supporting planned investment across the wider business in LNG growth and new energy opportunities. Woodside would also strengthen its position in its key Northwest Shelf LNG and Scarborough assets. Woodside would be firmly in control of the Scarborough development but will continue to look for new partners to optimise future capital outlays.
Woodside and its partner BHP Group are targeting final investment approval for the 8 million tonne per year (t/y) Scarborough liquefied natural gas (LNG) development later this year. First LNG exports are planned for 2026. The Scarborough development offshore Western Australia will feed an expansion of Woodside’s Pluto LNG facility, with the combined project previously estimated to cost $11.4 billion. An exit from its petroleum business has been long rumoured for BHP, and as it faces rising pressure from the energy transition, the mining conglomerate has determined now to be the optimum moment to achieve maximum value. The terms of any merger announcement will be closely examined to see exactly what value has been achieved. Following hot on the heels of Santos’ proposed merger with Oil Search, a Woodside-BHP combination is further evidence of oil and gas operators seeking solace from longer term uncertainty through scale, and doubling down on long-term, cash-generative, resilient resource themes.