Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<a href="https://www.smartkarma.com/entities/bhp-group-ltd" target="_blank" data-smartkarma-citation="entities:147:1" rel="noopener">BHP Group (BHP AU)</a> has been reasonably widely thought to be interested in selling its global oil &amp; gas assets business as CEO Mike Henry looks to "future-facing" commodities businesses. Over the weekend, it came out that BHP global O&amp;G head Geraldine Slattery <a href="https://www.theaustralian.com.au/business/mining-energy/bhps-geraldine-slattery-arrival-sparks-woodside-deal-talk/news-story/d654f29deab29380c23abb6ca2ce261a" target="_blank" rel="noopener">had flown to Perth</a>, where <a href="https://www.smartkarma.com/entities/woodside-petroleum-ltd" target="_blank" data-smartkarma-citation="entities:177:1" rel="noopener">Woodside Petroleum (WPL AU)</a> is headquartered. Australian Financial Review's Street Talk column on Sunday confirmed that <a href="https://www.smartkarma.com/entities/woodside-petroleum-ltd" target="_blank" data-smartkarma-citation="entities:177:1" rel="noopener">Woodside Petroleum (WPL AU)</a> and <a href="https://www.smartkarma.com/entities/bhp-group-ltd" target="_blank" data-smartkarma-citation="entities:147:1" rel="noopener">BHP Group (BHP AU)</a> were in talks to do a deal on BHP's oil and gas assets whereby Woodside would issue BHP $20bn of shares in return for the assets, and then BHP would distribute most of the shares to shareholders so as to make sure it did not turn into a change-of-control transaction. There simply is no way this would be done as a cash transaction.I note that Woodside itself is looking for a permanent CEO after longtime CEO Peter Coleman exited in June. Meg O’Neill in charge of Woodside’s development and marketing arm, is acting CEO. Getting a new CEO in the process of buying assets to make it bigger - especially increasing its presence in the Scarborough project and in the Gulf of Mexico, might be just the ticket. The discussion being mooted suggests a change of control situation might be or have been in the offing. Based on revenues and operating profits that may be reasonable. Based on total assets, it would suggest a strong premium for BHP's producing and development assets. BHP reports earnings on Tuesday after market close, and Woodside reports pre-open on Wednesday.BHP has been distributing proceeds of its shrinkage to its investors for the last while. One should not expect that to change. What "price" BHP "gets" in such a deal is almost irrelevant - A$18bn? A$20bn? A$18bn? If they get an extra A$1bn it will be a nice cherry on top for the owners of A$250bn market cap company but there are questions about upfront vs ongoing liability and one does not know if they would retain a 15-20% stake, as is apparently being <a href="https://www.theaustralian.com.au/business/mining-energy/bhps-geraldine-slattery-arrival-sparks-woodside-deal-talk/news-story/d654f29deab29380c23abb6ca2ce261a" target="_blank" rel="noopener">mooted</a>.However, the deal structure itself creates some interesting issues which will mean some very big changes.More below.

BHP Group (BHP AU) has been reasonably widely thought to be interested in selling its global oil &amp; gas assets business as CEO Mike Henry looks to "future-facing" commodities businesses. Over the weekend, it came out that BHP global O&amp;G head Geraldine Slattery had flown to Perth, where Woodside Petroleum (WPL AU) is headquartered. Australian Financial Review's Street Talk column on Sunday confirmed that Woodside Petroleum (WPL AU) and BHP Group (BHP AU) were in talks to do a deal on BHP's oil and gas assets whereby Woodside would issue BHP $20bn of shares in return for the assets, and then BHP would distribute most of the shares to shareholders so as to make sure it did not turn into a change-of-control transaction. There simply is no way this would be done as a cash transaction.I note that Woodside itself is looking for a permanent CEO after longtime CEO Peter Coleman exited in June. Meg O’Neill in charge of Woodside’s development and marketing arm, is acting CEO. Getting a new CEO in the process of buying assets to make it bigger - especially increasing its presence in the Scarborough project and in the Gulf of Mexico, might be just the ticket. The discussion being mooted suggests a change of control situation might be or have been in the offing. Based on revenues and operating profits that may be reasonable. Based on total assets, it would suggest a strong premium for BHP's producing and development assets. BHP reports earnings on Tuesday after market close, and Woodside reports pre-open on Wednesday.BHP has been distributing proceeds of its shrinkage to its investors for the last while. One should not expect that to change. What "price" BHP "gets" in such a deal is almost irrelevant - A$18bn? A$20bn? A$18bn? If they get an extra A$1bn it will be a nice cherry on top for the owners of A$250bn market cap company but there are questions about upfront vs ongoing liability and one does not know if they would retain a 15-20% stake, as is apparently being mooted.However, the deal structure itself creates some interesting issues which will mean some very big changes.More below.

If Woodside Buys BHP Petroleum for Scrip, There Will Be Flowback

David Blennerhassett

<div>
Despite a momentary memory lapse from <a href="https://www.smartkarma.com/entities/oil-search-ltd" target="_blank" data-smartkarma-citation="entities:773:1" rel="noopener">Oil Search Ltd (OSH AU)</a>, <a href="https://www.smartkarma.com/entities/santos-ltd" target="_blank" data-smartkarma-citation="entities:711:1" rel="noopener">Santos Ltd (STO AU)</a> <a target="_blank">confirmed</a> on the 20 July it had submitted a confidential, non-binding, indicative all-scrip merger proposal to Oil Search's board on the 25 June.
</div>
<div>
Santos proposed Oil Search shareholders receive 0.589 new Santos shares for each Oil Search share held, resulting in Oil Search shareholders holding 37% of the merged group and Santos shareholders 63%. The implied transaction price, to be implemented via a Scheme, was A$4.25 per Oil Search share - based on Santos’ closing price on 24 June 2021 - or a 12.3% premium to Oil Search's closing price on the same day.
</div>
<div>
Oil Search considered the terms were not fair but <a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02397158-2A1310798?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank" rel="noopener">agreed</a> there was strategic logic combining with Santos. 
In <a href="https://skr.ma/epYxh" target="_blank" rel="noopener">Santos/Oil Search: Getting Facts Straight</a>, I recommended buying Oil Search, with a view towards an improved ratio upwards of ~0.66x, or ~25% premium to last close using both share prices as 24 June. 
This morning Santos <a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02402372-2A1313090?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank" rel="noopener">bumped</a> the consideration by 6.5% to 0.6275 new Santos shares for every Oil Search share.  This would give Oil Search's shareholders 38.5% of the merger group. The implied transaction price of A$4.52/share  - if using Santos price on the 24 June - is a 19.7% premium to the undisturbed price. 
The Oil Search board recommends the Offer in the absence of superior proposal. Due diligence has been afforded.
More below the fold.
</div>
<div>

</div>


Despite a momentary memory lapse from Oil Search Ltd (OSH AU), Santos Ltd (STO AU) confirmed on the 20 July it had submitted a confidential, non-binding, indicative all-scrip merger proposal to Oil Search's board on the 25 June.


Santos proposed Oil Search shareholders receive 0.589 new Santos shares for each Oil Search share held, resulting in Oil Search shareholders holding 37% of the merged group and Santos shareholders 63%. The implied transaction price, to be implemented via a Scheme, was A$4.25 per Oil Search share - based on Santos’ closing price on 24 June 2021 - or a 12.3% premium to Oil Search's closing price on the same day.


Oil Search considered the terms were not fair but agreed there was strategic logic combining with Santos. 
In Santos/Oil Search: Getting Facts Straight, I recommended buying Oil Search, with a view towards an improved ratio upwards of ~0.66x, or ~25% premium to last close using both share prices as 24 June. 
This morning Santos bumped the consideration by 6.5% to 0.6275 new Santos shares for every Oil Search share.  This would give Oil Search's shareholders 38.5% of the merger group. The implied transaction price of A$4.52/share  - if using Santos price on the 24 June - is a 19.7% premium to the undisturbed price. 
The Oil Search board recommends the Offer in the absence of superior proposal. Due diligence has been afforded.
More below the fold.





When questioned by analysts at an investor briefing on the 19 July as to any takeover offers, <a href="https://www.smartkarma.com/entities/oil-search-ltd" target="_blank" data-smartkarma-citation="entities:773:1" rel="noopener">Oil Search Ltd (OSH AU)</a>'s chairman Rick Lee denied it had received a change-of control approach.
That wasn't entirely incorrect. It wasn't even close. 
The day after that briefing, <a href="https://www.smartkarma.com/entities/santos-ltd" target="_blank" data-smartkarma-citation="entities:711:1" rel="noopener">Santos Ltd (STO AU)</a> <a href="file:///D:/Quiddity/Oil%20search/2924-02396991_NPS-2A1310715.pdf" target="_blank" rel="noopener">confirmed</a> that on 25 June 2021 it had submitted a confidential, non-binding, indicative all-scrip merger proposal to Oil Search's board.
The proposal, to be implemented through a Scheme, would result in Oil Search shareholders receiving 0.589 new Santos shares for each Oil Search share held. Upon completion, Oil Search shareholders would own 37% of the merged group and Santos shareholders 63%.
The implied transaction price was A$4.25 per Oil Search share, based on Santos’ closing price on 24 June 2021, or a 12.3% premium to Oil Search's closing price on the same day.
Oil Search <a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02397158-2A1310798?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank" rel="noopener">agreed</a> there was strategic logic combining with Santos, but that the terms of the combo were "demonstrably not" fair. 
In addition, Oil Search's MD Kerian Wulff <a href="file:///D:/Quiddity/Oil%20search/2924-02396558-2A1310512.pdf" target="_blank" rel="noopener">resigned</a> for health reasons and that:
<blockquote>
following the receipt of recent concerns and complaints about his (Wulff's) behaviour .... the Board considered that Dr Wulff had behaved in a manner inconsistent with the standards expected by the Board in relation to his management style.
</blockquote>
Lots more below the fold.

When questioned by analysts at an investor briefing on the 19 July as to any takeover offers, Oil Search Ltd (OSH AU)'s chairman Rick Lee denied it had received a change-of control approach.
That wasn't entirely incorrect. It wasn't even close. 
The day after that briefing, Santos Ltd (STO AU) confirmed that on 25 June 2021 it had submitted a confidential, non-binding, indicative all-scrip merger proposal to Oil Search's board.
The proposal, to be implemented through a Scheme, would result in Oil Search shareholders receiving 0.589 new Santos shares for each Oil Search share held. Upon completion, Oil Search shareholders would own 37% of the merged group and Santos shareholders 63%.
The implied transaction price was A$4.25 per Oil Search share, based on Santos’ closing price on 24 June 2021, or a 12.3% premium to Oil Search's closing price on the same day.
Oil Search agreed there was strategic logic combining with Santos, but that the terms of the combo were "demonstrably not" fair. 
In addition, Oil Search's MD Kerian Wulff resigned for health reasons and that:

following the receipt of recent concerns and complaints about his (Wulff's) behaviour .... the Board considered that Dr Wulff had behaved in a manner inconsistent with the standards expected by the Board in relation to his management style.

Lots more below the fold.

Santos/Oil Search: Getting Facts Straight

Smartkarma Research Team, Smartkarma

Smartkarma Research

Smartkarma Research Team

Smartkarma

Smartkarma unites the fragmented investment industry, connecting institutional investors, independent research providers, and corporates within a single network.

Research Reinvented

For our next Smartkarma Webinar, we are thrilled to welcome back Insight Provider <a href="https://www.smartkarma.com/profiles/kyle-rudden" target="_blank" data-smartkarma-citation="accounts:4495" rel="noopener">Kyle Rudden</a> , who will be sharing insights on the trending issue of Environmental, Social, and Governance Investing. ESG investing is widely seen as a way of investing “sustainably” where investments are made with consideration of the environment and human well-being, as well as the economy. Kyle believes global sustainability is imperative and views private-sector capital as its cornerstone. As such, he supports the various impact-oriented strategies typically associated with ESG investing. However, his views on ESG and investing lean more pragmatic than idealistic, and his research focuses on applying ESG analysis to general investing rather than to "ESG investing" per se. Kyle subscribes to the Triple Bottom Line view of sustainability, where economic and financial metrics are deemed as important as ESG factors.This webinar is organised jointly by Smartkarma and SGX.<h3>The webinar will be hosted on Wednesday, 14 July 2021, 17:00 SGT/HKT.</h3><div class="content-highlight"><h2><a href="https://share.hsforms.com/1H9pFZOB-RF2J00kbvMmxcw2c5gj?zoom_webinar_id=86937019742" target="_blank" rel="noopener">Register for the Webinar here</a></h2></div>Kyle Rudden is an ESG (Environmental, Social, Governance) analyst with an alpha-centric approach to ESG research. After all, ESG investing is, first and foremost, investing. "Alpha-centric" does not mean apathetic, however. Quite the contrary. Kyle believes global sustainability – i.e., environmental stewardship, social equality, and economic prosperity – is imperative, and private-sector capital is its cornerstone. Private-sector capital still has fiduciary responsibilities. Profitability is necessary for sustained impact. The Triple Bottom Line. People, Planet, AND Profit.

For our next Smartkarma Webinar, we are thrilled to welcome back Insight Provider Kyle Rudden , who will be sharing insights on the trending issue of Environmental, Social, and Governance Investing. ESG investing is widely seen as a way of investing “sustainably” where investments are made with consideration of the environment and human well-being, as well as the economy. Kyle believes global sustainability is imperative and views private-sector capital as its cornerstone. As such, he supports the various impact-oriented strategies typically associated with ESG investing. However, his views on ESG and investing lean more pragmatic than idealistic, and his research focuses on applying ESG analysis to general investing rather than to "ESG investing" per se. Kyle subscribes to the Triple Bottom Line view of sustainability, where economic and financial metrics are deemed as important as ESG factors.This webinar is organised jointly by Smartkarma and SGX.The webinar will be hosted on Wednesday, 14 July 2021, 17:00 SGT/HKT.Register for the Webinar hereKyle Rudden is an ESG (Environmental, Social, Governance) analyst with an alpha-centric approach to ESG research. After all, ESG investing is, first and foremost, investing. "Alpha-centric" does not mean apathetic, however. Quite the contrary. Kyle believes global sustainability – i.e., environmental stewardship, social equality, and economic prosperity – is imperative, and private-sector capital is its cornerstone. Private-sector capital still has fiduciary responsibilities. Profitability is necessary for sustained impact. The Triple Bottom Line. People, Planet, AND Profit.

Smartkarma Webinar | Foundations of Sustainable/ESG Investing and Finance

Alpha-Centric ESG Research

Kyle Rudden

Shortly after publishing <a href="https://www.smartkarma.com/insights/engine-versus-exxon-activist-hedge-fund-s-proxy-fight-win-reverberates-through-big-oil-boardrooms" target="_blank" data-smartkarma-citation="insights:52318" rel="noopener">Engine Versus Exxon: Activist Hedge Fund's Proxy Fight Win Reverberates Through "Big Oil" Boardrooms</a>, I decided that a follow-up report (such as this one) would be a good supplement. So, consider this an addendum of sorts to that first Insight.Whereas "Engine Versus Exxon" was a mostly qualitative discussion of recent events for Exxon and six other supermajors, this is a more data-driven look of a much larger universe of oil stocks; 50 in total, representing 24 countries (mainly in the Americas, Asia Pacific, and Europe).Together, they are a good proxy for the broader Energy sector – an aggregate market capitalisation of US$4.6 trillion, and responsible for an astounding 20.5 billion MtCO2e in emissions, about 65% of all energy-related greenhouse gas (GHG) emissions.This is a relatively focused Insight, covering four related areas:<ol>
<li>
Carbon Footprints: Scope 1, Scope 2, and Scope 3 emissions for each (ranked and sorted).</li>
<li>
Climate Policies: Where each stands vis-à-vis implementation of climate-related policies.</li>
<li>
Emissions Targets: Which companies are claiming to go net-zero emissions, and by when.</li>
<li>
Capital Investment: How future CapEx is (or is not) aligned with global warming targets.</li>
</ol>

Shortly after publishing Engine Versus Exxon: Activist Hedge Fund's Proxy Fight Win Reverberates Through "Big Oil" Boardrooms, I decided that a follow-up report (such as this one) would be a good supplement. So, consider this an addendum of sorts to that first Insight.Whereas "Engine Versus Exxon" was a mostly qualitative discussion of recent events for Exxon and six other supermajors, this is a more data-driven look of a much larger universe of oil stocks; 50 in total, representing 24 countries (mainly in the Americas, Asia Pacific, and Europe).Together, they are a good proxy for the broader Energy sector – an aggregate market capitalisation of US$4.6 trillion, and responsible for an astounding 20.5 billion MtCO2e in emissions, about 65% of all energy-related greenhouse gas (GHG) emissions.This is a relatively focused Insight, covering four related areas:

Carbon Footprints: Scope 1, Scope 2, and Scope 3 emissions for each (ranked and sorted).

Climate Policies: Where each stands vis-à-vis implementation of climate-related policies.

Emissions Targets: Which companies are claiming to go net-zero emissions, and by when.

Capital Investment: How future CapEx is (or is not) aligned with global warming targets.


Greenhouse Gas Emissions Profiles of 50 of the World's Largest Oil Companies

United States

Exxon Mobil Corporation operates petroleum and petrochemicals businesses on a worldwide basis.  The Company's operations include exploration and production of oil and gas, electric power generation, and coal and minerals operations. Exxon Mobil also manufactures and markets fuels, lubricants, and chemicals.

Price Gauge
52-week Range	0.00 - 0.00
Market Cap (USDm)	0.00
P/E	0.00
Dividend (Yield)	0.00

Exxon Mobil (XOM US)

If Woodside Buys BHP Petroleum for Scrip, There Will Be Flowback

Woodside and BHP may announce WPL will buy BHP's oil & gas business for scrip. An announcement could come in the next 36 hrs. It would mean a huge...

Travis Lundy

Santos and Oil Search Agree on Terms

This remains a non-binding offer but ostensibly is done. Yet Wulff's resignation, Mubadala's sell-down, and chairman Rick Lee's odd short-term...

David Blennerhassett

Santos/Oil Search: Getting Facts Straight

I would expect Oil Search to engage at ~0.66x, or ~25% premium to last close using both share prices as 24 June. I'd be buying here. I would expect...

David Blennerhassett

Smartkarma Webinar | Foundations of Sustainable/ESG Investing and Finance

On 14 July, 5pm SGT, join our webinar with Kyle Rudden, who will be sharing his insights on the trending issue of ESG Investing and the Triple...

Smartkarma Research

Greenhouse Gas Emissions Profiles of 50 of the World's Largest Oil Companies

A quick overview of the carbon footprints and climate policies of 50 of the world's largest oil stocks (mainly Asia Pacific, Americas, and Europe...

Kyle Rudden

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)