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BHP Group has agreed to sell its petroleum business to Woodside Petroleum in a merger to create a top 10 independent oil and gas producer worth A$38.5 billion ($28 billion) with growth assets in Australia and the Americas.
BHP’s exit from petroleum, which made up just 5% of its annual earnings, speeds up its exit from fossil fuels amid pressure from environmentally conscious investors. BHP CEO Mike Henry, however, said the company remained committed to metallurgical coal used in steel making.
BHP shareholders will be paid in Woodside stock, giving BHP investors a 48% stake in the merged group.
That effectively values BHP’s petroleum arm at about A$18.5 billion ($13 billion) on Tuesday’s close, roughly in the middle of analysts’ valuations between $10 billion and $17 billion.
For Woodside, the deal is transformational, doubling its output, expanding its footprint in liquefied natural gas, removing the main obstacle to its $12 billion Scarborough gas project and giving it near-term growth options in the Gulf of Mexico.
BHP’s assets, including its ageing assets in Australia’s Bass Strait where its petroleum business originated, generate cash that will help Woodside fund the Scarborough project as well as developments in the Gulf of Mexico.
“Merging Woodside with BHP’s oil and gas business delivers a stronger balance sheet, increased cash flow and enduring financial strength to fund planned developments in the near term and new energy sources into the future,” Woodside Chief Executive Meg O’Neill said in a statement.
“We will have more optionality in where we invest and can prioritize the highest return opportunities,” she told analysts.
The merger ratio involved no premium for BHP’s assets, she said.
The deal was announced at the same time as Woodside appointed O’Neill as chief executive, following a stint as acting CEO. Some analysts had speculated BHP’s petroleum chief Geraldine Slattery, would get the job.
“The proposed transaction de-risks and supports Scarborough FID (final investment decision) later this year and enables more flexible capital allocation,” O’Neill said.
The companies said the merger would generate annual savings of more than $400 million from 2023, the year after the deal is expected to close.
Woodside plans to put the share issue to a vote in the second quarter of 2022.
A big Woodside investor, Allan Gray Australia, has raised concerns about a deal, especially if it involved a massive share issue.
“It’s very unlikely that shareholders would jump at that idea. We certainly wouldn’t,” Allan Gray Australia Chief Investment Officer Simon Mawhinney told Reuters last week.
O’Neill played down concerns that many BHP investors who don’t want fossil fuels or an Australian stock might dump the Woodside shares, saying there is already overlap among investors in the company and it would consider secondary listings in London and New York to help keep “high value” investors on board. Analysts raised concern about the near-term decommissioning liabilities Woodside will be inheriting with BHP’s stake in the Bass Strait oil and gas fields. Analysts have estimated those costs at least $2 billion, but O’Neill would not put a figure on it.
“We feel good about how we’ve valued the decommissioning obligation in setting the merger ratio,” she said.
Source: Reuters
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Valaris Limited announced new contracts awarded subsequent to issuing the Company’s most recent fleet status report on February 21, 2023. Three-year contract with Petrobras for drillship VALARIS DS-8. The rig will be reactivated for this contract. The total contract value is approximately $500 million, including a $30 million mobilization fee. 100-day contract with a TotalEnergies affiliate for drillship VALARIS DS-12. The contract is expected to commence in second quarter 2023. 70-day contract with Beach Energy offshore New Zealand for heavy duty modern jackup VALARIS 107. The contract is expected to commence in third quarter 2023. The total contract value is approximately $26 million. President and Chief Executive Officer Anton Dibowitz said, “We are particularly pleased to have secured the award for preservation stacked drillship VALARIS DS-8, for a contract that is expected to generate a meaningful return over the firm contract term, and we remain focused on exercising our operational leverage in a disciplined manner. This most recent award represents the sixth contract awarded to one of our high-quality stacked floaters since mid-2021, and speaks volumes about our demonstrated track record of project execution when reactivating rigs.” Dibowitz added, “Following the reactivation of VALARIS DS-17 and DS-8, we will have ten floaters working across the golden triangle, including four drillships in Brazil, a market where we expect to see continued growth over the next several years.” Updated Guidance As a result of the contract awarded to VALARIS DS-8, which will require the rig to be reactivated from preservation stack, we are updating our first quarter 2023 and full-year 2023 guidance provided on our fourth quarter 2022 conference call on February 21, 2023. First Quarter 2023 Contract drilling expense is expected to increase by approximately $5 million to $385 million to $395 million. Adjusted EBITDA is expected to decrease by approximately $5 million to negative $5 million to breakeven. Adjusted EBITDAR, which adds back one-time reactivation expense, is expected to be $25 million to $30 million, unchanged from the guidance provided on our fourth quarter 2022 conference call. Full-Year 2023 Revenues are anticipated to be $1.8 billion to $1.9 billion, unchanged from the guidance provided on our fourth quarter 2022 conference call. Contract drilling expense is expected to increase by approximately $60 million to $1.49 billion to $1.59 billion. Adjusted EBITDA is expected to decrease by approximately $60 million to $180 million to $220 million. Adjusted EBITDAR, which adds back one-time reactivation expense, is expected to be $280 million to $320 million, unchanged from the guidance provided on our fourth quarter 2022 conference call. Capital expenditures are expected to increase by $60 million to $320 million to $360 million. Source: Valaris Join our mailing list here We are #1 on Google and Bing for the "Largest Mobile Energy Network" Come join our community! Download the Rig Lynx app here
Seadrill Limited announced that the West Neptune has executed approximately six months of term extensions with LLOG Exploration Offshore, L.L.C in the US Gulf of Mexico. The extensions will commence in direct continuation of the existing term, and will keep the rig busy until Q3 2024, furthering Seadrill and LLOG’s long-term association. Total contract value for the extension is approximately $79 million. Source: Seadrill Join our mailing list here We are #1 on Google and Bing for the "Largest Mobile Energy Network" Come join our community! Download the Rig Lynx app here
Semisub rig owner Dolphin Drilling has inked a new contract with Peak Petroleum in Nigeria for its 1974-built Blackford Dolphin. The firm contract, which follows the letter of award in January, gives the Euronext Growth-listed owner of three rigs the potential to extend the unit’s backlog by a minimum of 120 days and up to 485 days. The deal adds to and will be a direct continuation of the previously announced 12-month contract with General Hydrocarbon Limited (GHL). Øystein Stray Spetalen-backed company said the effective dayrate associated with the minimum firm period of the contract is $325,000, including the mobilisation fee. “The final award of the contract for Blackford Dolphin shows the opportunities in Nigeria at a strong dayrate, in addition to building on the backlog for the rig. It also underlines the attractiveness of our assets, and we look forward to returning to revenue-generating operations in 2023,” noted Bjørnar Iversen, CEO of Dolphin Drilling. Source: Dolphin Join our mailing list here We are #1 on Google and Bing for the "Largest Mobile Energy Network" Come join our community! Download the Rig Lynx app here
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