(Alliance News) - Mining company BHP Group PLC on Tuesday said it plans to unify its corporate structure under its Australian parent company and expects to move its primary listing to Sydney's Australian Securities Exchange in 2020, with the agreed Woodside Petroleum Ltd merger to follow.
The UK's FTSE 100 index is likely to lose its largest company the Financial Times reported on Tuesday, as BHP said it expects to shift its primary listing to the ASX by the first half of 2022.
BHP added that it plans keep a standard listing on the London Stock Exchange, a secondary listing on the Johannesburg Stock Exchange, and a sponsored Level II American depositary receipt program on the New York Stock Exchange.
Since 2001, BHP has had two parent companies - Sydney-listed BHP Group Ltd and London-listed BHP Group PLC - which operate as a single economic entity.
Unifying its dual-corporate structure under the Australian parent would improve its "simplicity and flexibility" in future, the company said.
Shares in BHP Group PLC were trading up 6.7% at 2,433.00 pence each in London on Tuesday. Meanwhile in Sydney, BHP Group Ltd shares closed down 1.4% at AUD51.33 and Woodside shed 2.1% at AUD20.73 on Tuesday.
London and Melbourne-based BHP and Perth-based Woodside Petroleum have agreed to merge their oil and gas portfolios to create one of the 10 largest independent energy producers in the world and the largest listed in Sydney, the pair said on Tuesday.
BHP and Woodside had confirmed talks about such a combination on Monday. They said on Tuesday that, following the all-stock merger of the two oil and gas businesses, Woodside shareholders will have 52% of the new company and BHP shareholders 48%.
The two companies said they expect to achieve more than USD400 million per year in cost synergies from the combination.
"The merger of our petroleum assets with Woodside will create an organisation with the scale, capability and expertise to meet global demand for key oil and gas resources the world will need over the energy transition," said BHP Chief Executive Officer Mike Henry.
Referring to shareholder agitation for BHP to shed its oil exposure and become a pure miner, Henry said: "Bringing the BHP and Woodside assets together will provide choice for BHP shareholders, unlock synergies in how these assets are managed and allow capital to be deployed to the highest quality opportunities."
The combined business will produce 200 million barrels of oil equivalent per year, based on financial 2021 net production, from locations ranging from Australia to the Gulf of Mexico and Trinidad & Tobago. Of this 46% will be liquefied natural gas, 29% oil and condensate, and 25% domestic gas and liquids.
Also on Tuesday, BHP announced a jump in pretax profit to USD24.60 billion in its financial year ended June 30, up 82% from USD13.51 billion a year prior and 63% above the USD15.05 billion reported in financial 2019.
Revenue rose 42% year-on-year to USD60.82 billion from USD42.93 billion, beating the company-compiled consensus for USD59.71 billion.
BHP's revenue remains above pre-pandemic levels, up 37% from USD44.29 billion two years ago.
The global resource company issued a final dividend of 200 US cents per share for an overall annual dividend of 301.0 cents, at the higher end of analysts predictions and up sharply from 120.0 cents the previous year. In financial 2019, BHP issued a final dividend of 133.0 cents.
Alongside its result, the miner said it has approved capital expenditure of USD5.7 billion for its Jansen stage 1 potash project in Canada.
The company said around 50% of all engineering required for Jansen have now been completed after significant initial outlays worth USD4.5 billion.
The project is expected to produce 4.4 million tonnes of potash year upon completion, the company said, with first ore anticipated in 2027.
Overall, construction is expected to take around six years plus a two year ramp-up period, BHP noted.
"Jansen is expected to generate an internal rate of return of 12 to 14 per cent, an expected payback period of seven years from first production and an underlying [earnings before interest, tax, depreciation and amortisation] margin of approximately 70 per cent given its expected first quartile cost position," the company added.
Chair Ken MacKenzie said: "BHP is in a strong position to manage its future in a time of rapid change. We have a clear strategy and are executing against it. Jansen Stage 1 will give BHP exposure to a commodity with a strong demand outlook and decades of potential growth.
"The agreement to pursue a merger of BHP's Petroleum business with Woodside will maximise the value of our oil and gas assets through increased operating scale and synergies, with a more diversified product portfolio to support the energy transition."
Woodside also confirmed acting chief executive Meg O'Neill as the company's permanent chief executive and managing director.
Chair Richard Goyder said O'Neill is "an outstanding executive with 27 years' experience working in the global oil and gas industry, with a proven track record of delivery across the oil and gas value chain, making her the ideal person to lead Woodside as we significantly expand the business in a cost efficient and sustainable way."
By Scarlett Butler; scarlettbutler@alliancenews.com
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