StockMarketWire.com - Mining giant BHP said it had agreed to merge its oil and gas portfolio with Woodside to create a global energy company that would be listed on the ASX.

'Merging our petroleum business with Woodside creates a large, more resilient company, better able to navigate the energy transition and grow value while doing so,' the company said.

Completion was targeted for the second quarter of the 2022 calendar year, and the effective date of the merger would be 1 July 2021.

Under the terms of the deal both companies have agreed that, if the Merger didn't complete, its only recourse was a reimbursement fee of US$160 million payable in certain circumstances.

In a separate announcement, BHP said it had approved US$1.5 billion in capital expenditure for development of the Scarborough upstream project located in the North Carnarvon Basin, Western Australia.

Final investment decisions would also been made by Woodside and the Scarborough would venture.

A US$150 million payment was payable to BHP Petroleum (North West Shelf) by Woodside following the investment decision of the Scarborough project relating to the 2016 divestment of BHP's 25% stake in the Scarborough joint venture to Woodside.

The approved capital expenditure represents BHP's 26.5% participating interest in phase 1 of the upstream development. Woodside held the remaining 73.5% interest and was the operator of the project.

'Field development will be completed in two phases with eight wells drilled in phase 1,' the company said.

'The upstream production facilities will be installed to supply 8 Mtpa LNG and 180 TJ/day of domestic gas, with first cargo expected in the 2026 calendar year.'

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