The emblem for Woodside Petroleum, Australia’s high unbiased oil and gasoline firm, adorns a promotional poster on show at a briefing for traders in Sydney, Australia, Might 23, 2018. REUTERS/David Grey/
MELBOURNE, April 8 (Reuters) – Australian gasoline producer Woodside Petroleum Ltd’s (WPL.AX) agreed merger with BHP Group’s (BHP.AX) petroleum arm is in the perfect curiosity of its shareholders, an unbiased knowledgeable stated, valuing the mixed group at round $40 billion.
International miner BHP agreed to hive off its petroleum enterprise to Woodside final 12 months in a nil-premium deal that may give BHP shareholders a 48% stake within the mixed group and switch Woodside right into a high 10 international unbiased oil and gasoline producer.
Accounting agency KPMG assessed the worth of the mixed group at between $37.2 billion and $42.3 billion, equating to a per share valuation of A$26.25 to A$29.81, which was equal to or greater than its estimate of Woodside’s present per share worth.
“Based mostly on these measures, the proposed transaction is, in our opinion, truthful to Woodside shareholders,” KPMG stated in a report commissioned by Woodside and launched to its shareholders on Friday forward of a vote on the deal on Might 19.
Woodside’s board unanimously really helpful that the corporate’s shareholders vote in favour of the merger.
Its shares fell 1.5% to A$32.40 after the report was launched, in contrast with a 0.5% acquire within the broader market.
KPMG’s valuation of the mixed group was beneath an estimates by UBS and Credit score Suisse, at about A$34.60 a share and A$33 a share respectively, primarily based on the banks’ present oil worth outlooks.
The unbiased knowledgeable assumed a Brent oil worth of $100 a barrel for 2022, falling progressively to $70 a barrel in 2026.
Credit score Suisse analyst Saul Kavonic stated KPMG’s report didn’t shine as a lot gentle on BHP’s progress prospects as hoped, together with considerably underestimating the potential worth of its Calypso gasoline discover in Trinidad.
He additionally stated the cashflow profile confirmed little enhance in free money move regardless of Woodside’s Scarborough gasoline undertaking coming on-line in 2026, which he stated “could flag threat of decline elsewhere, together with at Pluto/Sangomar/North West Shelf”.
KPMG highlighted the energy of the mixed stability sheet, with BHP property being handed over debt-free, which might decrease the mixed group’s gearing to round 8%, in contrast with Woodside’s goal gearing of 15% to 35%.
“BHP Petroleum’s asset base gives Woodside with fast entry to vital improvement and progress alternatives, inside a timeframe that’s unlikely to in any other case have been obtainable to Woodside as a standalone entity,” KPMG stated.
In a separate announcement, BHP stated primarily based on Woodside’s share worth of $25.55 on April 6, the implied worth of BHP Petroleum is $23.4 billion.
Woodside stated on Friday it expects to realize its goal of greater than $400 million in price financial savings from combining the 2 teams by early 2024, together with slicing government jobs and different employees, however stated finishing up the adjustments would require one-off prices of as much as $600 million within the first two years.
The unbiased knowledgeable’s report confirmed that Woodside will probably be inheriting about $3.9 billion in oil and gasoline closure and rehabilitation liabilities from BHP. learn extra
Reporting by Shashwat Awasthi; Enhancing by Uttaresh.V, Subhranshu Sahu, Tom Hogue and Jan Harvey
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