BHP mulls selling its petroleum division and it could fetch $15bn
BHP is mulling a merger which would offload the company’s petroleum division for as much as $15bn amid growing environmental pressure.
Today, the mining giant said it had “initiated a strategic review” of its multi-billion dollar Petroleum business to “re-assess its position and long-term strategic fit in the BHP portfolio.” The statement confirmed that a merger with Woodside Petroleum is under consideration which could see Woodside shares distributed to BHP shareholders.
While discussions between the parties are ongoing, the release confirmed that “no agreement has been reached on any such transaction.” The company said “a further announcement will be made as and when appropriate.”
BHP has faced growing pressure from shareholders to align its future strategy with the goal of achieving net zero emissions by 2050.
After BHP approved $802m of spending on oil projects in the U.S. Gulf of Mexico the company was accused of “betting billions against the Paris climate goals,” by campaigners from the Market Forces investor group.
The publication of the UN’s climate report, which last week issued dire warnings about the future of the planet, added to pressure from BHP investors who passed a resolution requesting details on how the company plans to exit fossil fuels.
Credit Suisse predicts that BHP will sell its entire fossil fuel business, including its petroleum division which has an estimated value of $10bn to $15bn, following the strategic review.
Analysts at Bernstein have estimated that the BHP division could be valued at around $13bn (£9.4bn).
The potential exit from oil and gas comes amid increasing pressure on large mining firms to reduce their exposure to fossil fuels and align more closely with the ambitions of the Paris climate agreement.
Today, BHP’s share price has risen by 1.49 per cent while Woodside’s share price has dropped by 4.55 per cent.
Read more: ‘Code red’ climate report sends oil prices sinking