The Woodside Petroleum Limited (ASX: WPL) share price is climbing in early trade today. This comes after The Australian reported the oil giant was nearing a deal with BHP Group Ltd (ASX: BHP) to acquire its petroleum operations.
At the time of writing, Woodside shares are swapping hands for $22.30, a gain of 1.29%.
The latest news follows reports last week BHP was looking to exit the oil and gas business.
Let’s take a closer look.
Woodside wants some black gold
According to the report, Woodside will be looking to acquire the global portfolio of assets BHP holds in oil and gas. Previously, it was believed Woodside was only looking to acquire the Australian petrol assets of the mining giant.
The deal could be announced in 3 weeks, according to experts cited by The Australian. Both companies will be showcasing their end-of-year results on 17 August – the same time as the expected announcement.
Woodside and BHP are already joint-venture partners in a number of Australian oil and gas rigs, including a few in Western Australia.
The Australian, citing market analysts, says BHP’s entire oil and gas portfolio is worth about $20.4 billion. Given the current Woodside share price, that’s almost the equivalent of the entire company’s market capitalisation ($21.2 billion).
It is believed Woodside will pay for the prized assets using scrips that will be distributed to BHP shareholders.
In its most recent half-year results, BHP’s petroleum segment generated US $1.6 billion in revenue – down 34% on the prior corresponding period (pcp). Petroleum’s earnings before interest, taxes, depreciation, and amortisation (EBITDA) was US $789 million – down 50% on the pcp.
In Woodside’s most recent full-year report, operating revenue was US$3.6 billion and underlying EBITDA was $1.9 billion. Both figures are down on the pcp.
Woodside share price snapshot
Over the past 12 months, the Woodside share price has increased 10%. The S&P/ASX 200 Index (ASX: XJO) has increased about 23% over the same time.
Only yesterday, the Woodside share price was on notice. This was a result of rumours the company was about to engage in mass job-cuts.