Woodside (ASX:WPL) share price slides as key investor slams BHP deal

Investor concerns mount as a Woodside and BHP deal verdict nears….

| More on:
ASX share investor holding up hand in stop motion

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Woodside Petroleum Limited (ASX: WPL) share price is in the red on Tuesday. This follows a scathing review by one of its key shareholders of Woodside's potential takeover of BHP Group Ltd (ASX: BHP)'s petroleum business.

At the time of writing, shares in the ASX-listed oil and gas producer are trading almost 2% lower at $20.77.

Both Woodside and BHP confirmed the media speculation yesterday, announcing that the two companies have been in discussions. The confirmation was met with selling, as the Woodside share price descended on Monday to finish 4.5% lower.

Deal provides no appeal to this shareholder

As we reported yesterday, BHP is keen to offload its pressured petroleum business, and Woodside is appearing to be a potential suitor.

While any such deal would provide a welcomed exit from a business shrouded in growing controversy for BHP, one respected portfolio manager is failing to see the positives for Woodside.

Allan Gray portfolio manager, Simon Mawhinney has already been in discussions with Woodside chair Richard Goyder to voice concerns of shareholder value destruction from the potential $20 billion deal. As reported by The Australian Financial Review, he said:

There's almost nothing that this deal offers that looks compelling to us… and the only thing we don't know is [the] price. It would be crucial that Woodside pay cents in the dollar for this – anything but would just be financially illiterate.

The unease exhibited by Mawhinney is likely shared by other market participants, explaining the falls in the Woodside share price this week.

However, other investors and analysts seem somewhat positive about the diversification potentially offered by any deal. For example, JP Morgan energy analyst Mark Busuttil believes the integration of BHP's business would increase Woodside's scale and simplify ownership of the North West Shelf venture and Scarborough project.

However, Mawhinney considers there to be major negatives. These include a mature asset base, declining production, and heightened exposure to ESG risks.

Woodside share price in view

The Woodside Petroleum share price has performed fairly poorly in the past 12 months compared to other ASX-listed oil and gas peers. Shares in the exchange's largest listed energy company have moved around 3% higher during the past year. Meanwhile, Santos Ltd (ASX: STO) and Oil Search Limited (ASX: OSH) have added around 8% and 24% respectively.

At the current share price, Woodside holds a market capitalisation of around $21.4 billion.

Motley Fool contributor Mitchell Lawler 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.

More on Energy Shares

A miner stands in front oh an excavator at a mine site
Broker Notes

Broker says buy the dip on ASX 200 uranium share with 69% upside

Shaw and Partners says this ASX uranium stock is trading at an attractive price point right now.

Read more »

Coal miner standing in a coal mine.
Energy Shares

This dividend stock is set to beat the ASX again and again

Depressed starting valuations may be of help.

Read more »

Miner looking at a tablet.
Energy Shares

Here's where this expert thinks the Pilbara Minerals share price is headed next

The ASX lithium share is facing profitability headwinds.

Read more »

Oil worker using a smartphone in front of an oil rig.
Energy Shares

Down 6% in October, what now for the Woodside share price?

After another month in the red, is there a light at the end of the tunnel for Woodside shares?

Read more »

Man restores power on a circuit breaker after electricity outage.
Energy Shares

Down 33%! Why this ASX 200 uranium stock is 'trading at a discount'

This ASX 200 uranium stock is materially undervalued by the market, according to a leading fund manager.

Read more »

A male electricity worker in hard hat and high visibility vest stands underneath large electricity generation towers as he holds a laptop computer and gazes up at the high voltage wires overhead.
Energy Shares

AGL share price dives 7% on broker downgrade

Broker Barrenjoey has released a note forecasting lower earnings for AGL between FY26 and FY30.

Read more »

View of a business man's hand passing a $100 note to another with a bank in the background.
Energy Shares

Woodside shares rise on $2.1 billion windfall

Let's see what the energy giant is selling to pull in these funds.

Read more »

A young man stands facing the camera and scratching his head with the other hand held upwards wondering if he should buy Whitehaven Coal shares
Energy Shares

What's going on with the Origin Energy share price today?

The energy giant's shares have slipped into the red on Thursday.

Read more »