BHP Group PLC (LSE:BHP) (LSE:BHP) has initiated a strategic review of its petroleum business, the company said in response to press speculation.
Woodside Petroleum Ltd is in advanced talks to buy BHP’s petroleum division for about A$20bn (£10.6bn), the Australian Financial Review reported on Sunday, citing people familiar with the matter.
“A number of options are being evaluated,” said BHP. “One option is a potential merger of the petroleum business with Woodside Petroleum Ltd (Woodside) and a distribution of Woodside shares to BHP shareholders.”
“We confirm that we have been in discussions with Woodside. While discussions between the parties are currently progressing, no agreement has been reached on any such transaction.”
Woodside issued a very similar statement, noting that the potential merger involved BHP’s entire petroleum business.
BHP is one of only a handful of large mining companies to have an oil operation. It unexpectedly turned its attention towards oil in the 1960s, making the first major oil and gas discovery in Australia in 1967, and was acquired by Royal Dutch Shell (NYSE:RDS.A) in 1970 before the metals and mining arm was eventually spun out into a separate company 27 years later.
In the year to end June 2020, BHP’s petroleum business accounted for about 9-10% of the group’s revenue and underlying earnings.
BHP is due to release its results for the year to end June 2021 tomorrow.