Woodside (ASX:WPL) share price climbing as megadeals signed off

It’s a big day for Woodside. Here’s why

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The Woodside Petroleum Limited (ASX: WPL) share price is taking off today following news of the company’s merger with BHP Group Ltd‘s (ASX: BHP) oil assets and its Scarborough project.

The two S&P/ASX 200 Index (ASX: XJO) giants have signed a binding share sale agreement.

Additionally, Woodside has made a final investment decision for the Scarborough project and Pluto Train 2 development.

At the time of writing, the Woodside share price is $22.40, 3.27% higher than its previous close.

Let’s take a closer look at the news released by the two companies after yesterday’s close.  

Woodside inks massive merger

Woodside and BHP have taken a huge step towards creating a top 10 global independent energy company and the largest energy company on the ASX.

The newly announced share sale agreement is the latest step towards their planned merger.

It will see Woodside taking on the entire share capital of BHP Petroleum International. In exchange, it will issue new Woodside shares to BHP.

On the other side of the merger, Woodside shareholders will own 48% of the combined entity. BHP’s shareholders will take home the other 52% stake.

The merger is now pencilled in to be completed in the second quarter of 2022.

It’s still subject to several regulatory approvals, shareholder approval, and independent experts finding the merger is in the best interests of Woodside shareholders.

Scarborough gets the green light

Additionally, the two giants have also both agreed to go ahead with their portions of the Scarborough project and Pluto Train 2.

According to Woodside, the US$12 billion development will be capable of being one of the lowest carbon intensity sources of LNG for customers in North Asia.

The project’s development will see 13 subsea wells created, as well as a semi-submersible floating production unit.

The project’s productions will travel through a 430-kilometre subsea pipeline to the Pluto LNG Facility in Karratha, Western Australia.

The first LNG cargo from the project is expected to set sail in 2026.

BHP has a 26.5% holding in the project, with Woodside owning the remaining share.

Last week, Woodside announced it had sold a 49% stake in Pluto Train 2 to Global Infrastructure Partners.  

However, not everyone is happy about today’s news. The Australasian Centre for Corporate Responsibility director of climate and environment Dan Gocher commented:

Woodside has declared war on the climate by reaching FID (final investment decision) on the single largest fossil fuel project in Australia in recent memory…

Any assumption by Woodside that the climate movement will abandon its opposition to the Scarborough project now that FID has been reached is sorely misplaced. Post-COP26, activists committed to a safe climate will only become more determined.

Woodside share price snapshot

Despite today’s gains, the Woodside share price is still 7% lower than it was this time last month.

It has also fallen 2.8% since the start of 2021.

Motley Fool contributor Brooke Cooper 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.

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