In 2022, BHP announced the merger of its oil and gas portfolio with Woodside Energy was...

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In 2022, BHP announced the merger of its oil and gas portfolio with Woodside Energy was complete. In the statement, BHP CEO, Mike Henry notes "BHP's world class portfolio is weighted towards commodities which support economic growth and have decarbonisation upside combined with our operational excellence will underpin attractive returns and long-term value growth." – Merger completion and in specie distribution. BHP. 1 June 2022, In August 2022, NGS Super, a retirement investment fund that was originally set up for teachers and seng million from that has over $13 billions in funds under management, announced it was divesting fossil fuel companies, including Woodside. NGS Super Chief Investment Officer Ben Squires said: "Companies whose revenue relies on further oil and gas exploration and production are at risk of becoming stranded assets as the world decarbonises, especially if they are solely focused on upstream oil and gas production. By divesting these companies, we expect to generate higher returns from allocating capital elsewhere". In 2023, Woodside announced a record net profit of $US6.5 billion for 2022. The profit included seven months' worth of contribution from the oil and gas assets bought from BHP in 2022. Part 1 Required: Research and explain how stranded asset risk is expected to impact the share price of BHP and Woodside in the next 5 years, 10 years, and 20 years. With respect to maximising its share price, do you think it was a good decision for BHP to sell its oil and gas assets in 2022? In 2022, BHP announced the merger of its oil and gas portfolio with Woodside Energy was complete. In the statement, BHP CEO, Mike Henry notes "BHP's world class portfolio is weighted towards commodities which support economic growth and have decarbonisation upside combined with our operational excellence will underpin attractive returns and long-term value growth." – Merger completion and in specie distribution. BHP. 1 June 2022, In August 2022, NGS Super, a retirement investment fund that was originally set up for teachers and seng million from that has over $13 billions in funds under management, announced it was divesting fossil fuel companies, including Woodside. NGS Super Chief Investment Officer Ben Squires said: "Companies whose revenue relies on further oil and gas exploration and production are at risk of becoming stranded assets as the world decarbonises, especially if they are solely focused on upstream oil and gas production. By divesting these companies, we expect to generate higher returns from allocating capital elsewhere". In 2023, Woodside announced a record net profit of $US6.5 billion for 2022. The profit included seven months' worth of contribution from the oil and gas assets bought from BHP in 2022. Part 1 Required: Research and explain how stranded asset risk is expected to impact the share price of BHP and Woodside in the next 5 years, 10 years, and 20 years. With respect to maximising its share price, do you think it was a good decision for BHP to sell its oil and gas assets in 2022?

Answer rating: 100% (QA)

ANSWER Stranded asset risk refers to the risk that certain assets such as fossil fuel reserves may become unviable or lose value due to changes in market conditions regulations or societal shifts towa... View the full answer