Woodside (ASX:WPL) share price slides as key investor slams BHP deal

Investor concerns mount as a Woodside and BHP deal verdict nears….

| More on:
ASX share investor holding up hand in stop motion

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Woodside Petroleum Limited (ASX: WPL) share price is in the red on Tuesday. This follows a scathing review by one of its key shareholders of Woodside's potential takeover of BHP Group Ltd (ASX: BHP)'s petroleum business.

At the time of writing, shares in the ASX-listed oil and gas producer are trading almost 2% lower at $20.77.

Both Woodside and BHP confirmed the media speculation yesterday, announcing that the two companies have been in discussions. The confirmation was met with selling, as the Woodside share price descended on Monday to finish 4.5% lower.

Deal provides no appeal to this shareholder

As we reported yesterday, BHP is keen to offload its pressured petroleum business, and Woodside is appearing to be a potential suitor.

While any such deal would provide a welcomed exit from a business shrouded in growing controversy for BHP, one respected portfolio manager is failing to see the positives for Woodside.

Allan Gray portfolio manager, Simon Mawhinney has already been in discussions with Woodside chair Richard Goyder to voice concerns of shareholder value destruction from the potential $20 billion deal. As reported by The Australian Financial Review, he said:

There's almost nothing that this deal offers that looks compelling to us… and the only thing we don't know is [the] price. It would be crucial that Woodside pay cents in the dollar for this – anything but would just be financially illiterate.

The unease exhibited by Mawhinney is likely shared by other market participants, explaining the falls in the Woodside share price this week.

However, other investors and analysts seem somewhat positive about the diversification potentially offered by any deal. For example, JP Morgan energy analyst Mark Busuttil believes the integration of BHP's business would increase Woodside's scale and simplify ownership of the North West Shelf venture and Scarborough project.

However, Mawhinney considers there to be major negatives. These include a mature asset base, declining production, and heightened exposure to ESG risks.

Woodside share price in view

The Woodside Petroleum share price has performed fairly poorly in the past 12 months compared to other ASX-listed oil and gas peers. Shares in the exchange's largest listed energy company have moved around 3% higher during the past year. Meanwhile, Santos Ltd (ASX: STO) and Oil Search Limited (ASX: OSH) have added around 8% and 24% respectively.

At the current share price, Woodside holds a market capitalisation of around $21.4 billion.

Motley Fool contributor Mitchell Lawler has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Energy Shares

A female coal miner wearing a white hardhat and orange high-vis vest holds a lump of coal and smiles as the Whitehaven Coal share price rises today
Dividend Investing

Invest $10,000 in New Hope shares and get $1,006 in passive income

Many ASX investors buy New Hope shares for their high yielding, fully franked dividends.

Read more »

a man in a business suit looks at a map of the world above a line up of oil barrels with a red arrow heading upwards above them, indicting rising oil prices.
Energy Shares

Why a US$100 oil price is on the horizon: IMF

A higher oil price could be on the horizon following this IMF prediction and Israel’s reported strike on Iran.

Read more »

A miner in visibility gear and hard hat looks seriously at an iPad device in a field where oil mining equipment is visible in the background.
Energy Shares

Why is this ASX 200 energy stock crashing 8% today?

Why are investors hitting the sell button on Friday?

Read more »

sad looking petroleum worker standing next to oil drill
Energy Shares

Woodside share price tumbles on 12% quarterly revenue decline

ASX 200 investors are bidding down the Woodside share price today.

Read more »

Worker inspecting oil and gas pipeline.

Here's where I see the Woodside share price ending 2024

I think the Woodside share price is poised for a 2024 rebound.

Read more »

A male oil and gas mechanic wearing a white hardhat walks along a steel platform above a series of gas pipes in a gas plant
Energy Shares

Here's how the Santos share price is responding to today's production results

Santos reported its quarterly production and revenue results today.

Read more »

A man casually dressed looks to the side in a pensive, thoughtful manner with one hand under his chin, holding a mobile phone in his hand while thinking about something.
Energy Shares

Should you buy the 10% dip on this ASX 300 uranium stock?

Could big returns be on the cards for buyers of this stock? Let's see what analysts are saying.

Read more »

A female coal miner wearing a white hardhat and orange high-vis vest holds a lump of coal and smiles as the Whitehaven Coal share price rises today
Broker Notes

1 ASX 200 energy stock with 'minimal competition' to buy right now

This stock is trading 30% lower than its 2022 record high.

Read more »