Mining giant BHP announced Tuesday it will merge its oil and gas assets with Australia's Woodside, in a multibillion-dollar deal that sees BHP exit the liquid fossil fuel business.
The Anglo-Australian firm said the agreement would see Woodside issue new shares to BHP shareholders as it becomes a global top 10 LNG producer.
Woodside's existing shareholders would retain a 52 per cent stake in the newly expanded Woodside, while BHP shareholders would own 48 per cent.
"Bringing the BHP and Woodside assets together will provide choice for BHP shareholders, unlock synergies in how these assets are managed and allow capital to be deployed to the highest quality opportunities," BHP chief executive Mike Henry said.
BHP's petroleum business is worth $15.4 billion, the company said.
"Merging Woodside with BHP's oil and gas business delivers a stronger balance sheet, increased cash flow and enduring financial strength to fund planned developments in the near term and new energy sources into the future," said Woodside CEO and managing director Meg O'Neill.
It comes just a year after BHP signalled a transition away from the intensely polluting thermal coal market as it aims to reach net-zero emissions by 2050.
O'Neill said Woodside would continue reducing carbon emissions from the combined portfolio as the firm strives to achieve the same target.
BHP also announced $17 billion in underlying profits in the 12 months to June 30, up 88 per cent from the previous year, on the back of high iron ore and copper prices.
Shareholders will receive a record final dividend of $2 a share, the company said in its annual earning report.