Top Australian miner BHP’s chances of selling its carbon-intensive oil and gas assets to Perth-based Woodside Petroleum could have high hurdles to clear amid signs of significant investor opposition to a deal proceeding.

Following months of speculation, BHP on Monday confirmed it was reviewing the future of its global petroleum division, which spans Australia, the Americas and North Africa. One option under consideration was a merger of the division with Woodside through a distribution of Woodside shares to BHP shareholders.

Top Australian miner BHP’s chances of selling its carbon-intensive oil and gas assets to Perth-based Woodside Petroleum could have high hurdles to clear amid signs of significant investor opposition to a deal proceeding.

Following months of speculation, BHP on Monday confirmed it was reviewing the future of its global petroleum division, which spans Australia, the Americas and North Africa. One option under consideration was a merger of the division with Woodside through a distribution of Woodside shares to BHP shareholders.

Selling out of oil and gas would mark the most significant shake-up of BHP’s portfolio in several years and an acceleration of chief executive Mike Henry’s retreat from planet-heating fossil fuels. The miner – whose top commodities are iron ore and copper – is facing mounting pressure from large investors and wider society to take greater action to decarbonise.

However, while the price of a would-be transaction remains unknown, a top Woodside shareholder has immediately expressed concerns about the Richard Goyder-led board overpaying and destroying value.

Allan Gray Australia, Woodside’s fourth-largest investor, said the mooted deal appeared a “bitter pill to swallow” and flagged its intention to vote against it unless the price was deemed compelling enough.

“There are a few issues, all of which culminate in our view that this is crazy from the perspective of Woodside shareholders,” Allan Gray chief investment officer Simon Mawhinney said.

“I shudder at the thought of what will come next.”

Mr Mawhinney said BHP’s oil and gas assets were mature, declining and faced imminent and onerous rehabilitation liabilities. It was also predominantly made up of oil – a fossil fuel considered more at risk from the clean energy shift. Woodside’s main commodity of liquefied natural gas (LNG), on the other hand, may have a brighter future, due to its potential role as a “transition fuel” supporting uptake of renewable energy as countries wean off coal, he said.

Extracted in full from: ‘Left holding the can’: BHP, Woodside oil talks fuel investor worries (smh.com.au)

 

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