There’s a new giant in the London stock market. It is an oil and gas company. , business News

A big new company has come overnight in the London stock market.

Shares of Woodside Energy, based in the Western Australian city of Perth, were included in the main list and received a decent premium on the first day, rising from a starting price of 1800p to 1992.8p at lunchtime.

At current prices the company is valued at just under £36bn.

Woodside may not be a household name in the UK but it certainly is in Australia.

Founded in 1954 as an oil company and taking its name from the city of Victoria near its leases, it was a pioneer in offshore oil exploration, setting a world record for depths beneath the South Australian sea floor.

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It continued as a specialist offshore oil and liquefied natural gas producer until the following decades, during which, its partners Shell and BHP – the Australian mining giant – each became 40% shareholders.

Shell, in fact, tried to buy out other shareholders with a $10bn takeover bid, which was blocked by the Australian government in 2001. Later both it and BHP sold their shareholding.

Fast forward to last year when BHP, which was earlier unloaded its US shale assetsannounced that it would abandon its dual-listed structure and move its core stock listing to Australia – giving up its position as the largest company on the FTSE 100 in the process.

The announcement was accompanied by news that BHP, which itself had sought to buy Woodside, would sell its remaining oil and gas assets to Woodside.

The deal was completed on Wednesday last week and, in the process, became one of the 10 largest independent energy companies in the world by hydrocarbon production.

Woodside Chief Executive Officer Meg O’Neill said: “Today, Woodside begins its journey as a global company, becoming a major supplier of the energy the world needs now and in the future. The demand will continue.”

“The merger provides a diversified portfolio of quality operating assets, as well as a suite of growth opportunities in oil, gas and new energy that promise ongoing value to our shareholders.”

“We are confident that the completion of the merger will enable Woodside to play a more important role in the energy transition that is imperative as we respond to climate change while ensuring a reliable and affordable supply of energy for a growing and ambitious global population.” “

With 48% of BHP’s shareholders emerging with the increased business, this means many UK investors will now have a stake in Woodside.

File photo of iron ore in BHP Billiton train

So, what are they getting?

As one might expect, Woodside’s assets are heavily skewed in Australia, including Pluto, which takes gas from the offshore Pluto and Xena gas fields in Western Australia and converts it into liquefied natural gas (LNG), the majority of its customers. is sent to. Japan.

It also owns more than a third of the North West Shelf just off the north west coast of the country, the massive natural gas project considered Australia’s largest resource project to date and where Woodside partnered with Shell for the first time. – a fellow shareholder – back in 1971.

The company’s current largest development project is currently the Scarborough gas field off the coast of Western Australia.

Further, Woodside also has a stake in the Angostura oil and gas field off the coast of Trinidad, the Shenzi oil and gas field off the coast of Louisiana in the Gulf of Mexico, where it is also a minority shareholder in Mad Dog and Atlantis Oil and Gas. The areas are both operated by BP.

There is also interest in the Sangomar oil field in Senegal, which, according to Ms O’Neal, is a grade ideally suited to replace Russian crude that will not reach European refineries anytime soon.

Woodside is also in the process of building non-oil and gas projects, as with the likes of BP and Shell, it wants to move away from hydrocarbons.

It has invested in three separate hydrogen and ammonia projects in Perth, Tasmania and Oklahoma, and in solar projects in California and Western Australia.

    National Grid's liquefied natural gas (LNG) plant is seen on 16 August 2013 in the Isle of Grain in southern England.  A new airport on the Isle of Grain would require the Mayor of London's preferred plan to relocate one of Britain's major gas import facilities at a time when Britain relies more heavily on foreign supplies.  The photograph was taken on 16 August 2013.  Reuters/Paul Hackett (UK - Tags: transport business politics energy environment)/file photo

The rationale for the merger was that the expanded Woodside Group would be more diversified geographically, with 15% in the US Gulf of Mexico and 5% in Trinidad and Tobago, and 29% in terms of production in terms of its products. Coming from oil and condensate.

Essentially, however, it is an investment in the LNG sector. LNG still makes up 46% of the combined production in the new group.

And that makes it a more interesting investing game than it was at the beginning of the year.

Russia’s invasion of Ukraine has inspired determination in many countries to wean themselves from Russian gas – and, for many of them, that means buying LNG, a commodity of which Australia is the world’s largest by volume. Large producer, ahead of Qatar and the United States. ,

Even before the war against Ukraine, global LNG demand was predicted to more than double in volume between 2021 and 2050, reflecting declining gas production in parts of Europe and Asia.

Australia, thanks to its existing long-term supply deals with many Asian customers, was already likely to benefit from that increase in demand.

The question for investors is whether most of it is already worth it.

Australian shares of Woodside have already risen in value by 45% since the start of the year, but the strength of the share price has been there over the past few weeks and may reflect the fact that many Sydney investors who were previously ‘short’ . Woodside stock — prior to the company’s large share issue for BHP’s petroleum business — has been buying to close out those positions recently.

So a lot of that value may already be in the Woodside share price. Still, it will be a business worth keeping an eye on.

Author: Admin

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