Shareholders in Woodside Petroleum have overwhelmingly approved the $63 billion merger with BHP Petroleum while at the same time delivering a strong rebuke to management over the company’s climate policy.
In fact, shareholders at the annual meeting in Perth lodged a 45% ‘no’ vote against a climate report that was deemed “detail-light” by a major proxy adviser.
It was a vote whose importance seemed of less significance than the merger vote, and yet it’s the one that generated much of the post meeting publicity and was the issue that Woodside addressed in a quick after meeting statement.
The provisional 98.66% approval for the scrip-based transaction with BHP had been in the bag for several days since proxies cast ahead of the meeting voted more than 97% in favour of the company defining deal.
Getting control of BHP’s assets, especially in the Gulf of Mexico and in the Caribbean, will make Woodside one of the world’s top 10 independent oil and gas producers, with a lower rate of debt that enhances its ability to invest in new low-carbon energy projects.
“The merger is an opportunity for Woodside to increase its contribution to the world’s growing energy needs and build the scale, resilience and diversity to thrive through the energy transition,” Woodside CEO Meg O’Neill told shareholders.
BHP will be paid in Woodside shares, giving BHP investors a 48% stake in the merged group, which will have assets in Australia, the United States, Mexico, Senegal and Trinidad.
That is going to change as many BHP shareholders quit the stock because they don’t want to hold it – after all BHP, a company with a carbon past, is the seller and has made no secret that it sees a greener future for itself.
Woodside shares eased 2.8% to $29.89.
It’s too early to blame the fall on the vote and the merger, especially with the wider market sell-off, but Woodside shares will remain under pressure for a while as BHP shareholders calibrate their holdings.
Woodside shareholders also approved a change of the company’s name to Woodside Energy Group Ltd.
But it was the high ’no’ vote against the climate report that obviously riled Woodside management.
In the statement that company defended its climate approach, saying it had “engaged extensively with shareholders over the year prior to, and following, the release of our Climate Report 2021 in February. Over that time we’ve heard a wide range of views on our response to climate change.
“At the commencement of today’s Annual General Meeting, shareholders representing approximately 52% of Woodside securities had participated in the non-binding, advisory vote on the Climate Report. These votes have been split evenly for and against the report.
“Woodside Chairman Richard Goyder said: “Woodside’s Board and leadership team stands behind our climate strategy and its two key elements: to reduce our net equity scope 1 and 2 greenhouse gas emissions; and invest in the products and services our customers need, as they reduce their emissions.
“We believe the Climate Report 2021 is an accurate and transparent summary of Woodside’s approach to climate change, and we are focused on delivering the commitments we have made in this report.
“We acknowledge that the energy transition is a complex and ongoing process. Our shareholders’ views are important to us and will continue to inform our approach as it evolves,” he said.
Woodside CEO Meg O’Neill said, “We are proud of our contribution to meeting the world’s energy needs and confident of our ongoing role as a low-cost, lower-carbon energy provider.
“We have set targets to reduce our own net equity emissions and to invest $5 billion between now and 2030 in lower-carbon products and services that will support the decarbonisation journeys of our customers,” she said.’
At least one proxy group had recommended voting against the climate report.
Woodside’s sensitivity on the issue was obvious from the address to the meeting by chair, Richard Goyder who acknowledge the criticism from some shareholders.
“We recognise that a significant proportion of shareholders who have already voted on this item have not supported the report.
“The Board stands by the quality of both the Climate Report and Woodside’s overall climate strategy, and is confident of our ongoing role to responsibly provide our customers with the energy they need in a lower-carbon world.
“We will continue incorporating feedback from our shareholders on this important issue as we further develop and evolve our approach,” he said.
