PERTH (miningweekly.com) – Oil and gas major Woodside has delivered a solid quarter of production as it readies for a merger with diversified miner BHP’s petroleum assets.

Production volumes for the three months to March were down 1% from the December quarter, to 22.3-million barrels of oil equivalent, while delivered sales volumes declined from 31.7-million barrels of oil equivalent (boe) to 25.4-million boe, in the same period.

Woodside CEO Meg O’Neill said the first quarter continued strong revenue performance with an increase in produced liquefied natural gas (LNG) sales volumes and A$2.36-billion of sales revenue.

“The implications of Russia’s invasion of Ukraine have reverberated globally, exacerbating already tight energy markets, particularly for LNG. This has resulted in unprecedented volatility and price spikes to levels not seen since the early part of last decade.

“Revenue was buoyed by a strong average realised portfolio price of $93/boe, despite overall lower sales volume owing to reduced trading activity in the currently volatile global energy market.

“We expect in the second quarter to see the continued benefit of stronger pricing, reflecting the oil price lag in many of our LNG contracts,” O’Neill said.

She noted that in April, significant milestones were achieved in the lead-up to the shareholder vote on Woodside’s proposed merger with BHP Petroleum.

The two companies in November last year struck an agreement to combine their respective oil and gas portfolios through a stock merger. The expanded Woodside would be owned 52% by existing Woodside shareholders and 48% by existing BHP shareholders.

The merger is subject to satisfaction of certain conditions, including approval of the transaction by the Woodside shareholders at Woodside’s annual general meeting on May 19.

“We believe the case for the proposed merger with BHP Petroleum is compelling. It will bring together the best of two successful organisations and deliver the increased scale, diversity and resilience to provide value to shareholders and ensure Woodside better navigates the energy transition,” O’Neill said on Tuesday.

“The Woodside board unanimously recommends shareholders vote in favour of the merger.

“The explanatory memorandum and independent expert report, which concluded that the proposed merger is in the best interests of Woodside shareholders, were issued earlier this month ahead of the vote, scheduled for our annual general meeting on May 19. Also in April, Woodside filed the required regulatory documents for our secondary listings in New York and London, which are expected to become active on completion of the proposed merger, targeted for June 1.”

Meanwhile, O’Neill noted that work on the Scarborough and Pluto Train 2 projects began to ramp up during the first quarter, with Bechtel, the engineering, procurement, construction and commissioning contractor for Pluto Train 2, beginning major civil works for the construction accommodation village in Karratha.

“Manufacture of the Scarborough pipeline commenced, and we also exercised a contractual option to fabricate the Scarborough subsea structures in Western Australia,” she added.

“Looking ahead, Woodside has signed binding agreements for the long-term charter of three new-build LNG carriers to be delivered prior to the startup of Scarborough. The new vessels will improve the cost-competitiveness and fuel efficiency of the Woodside fleet.

“In Senegal, the Sangomar field development Phase 1 is now more than 50% complete and remains on track for targeted first oil in 2023. Subsea equipment fabrication is progressing, and the second drillship, the Ocean BlackHawk, is scheduled to commence activities in mid-2022.

“An important transition point in the history of the North West Shelf project was realised in March with the startup of the Pluto-Karratha gas plant (KGP) Interconnector pipeline, for the first time enabling processing of third-party gas at Australia’s largest LNG production facility.

“The startup of the Pluto-KGP Interconnector supports the accelerated production of gas from the first phase of Pluto’s Pyxis hub, which is now operating and achieving targeted gas flow rates and in recent days the first LNG cargo produced through the Interconnector was loaded.

“Julimar-Brunello Phase 2 is now in steady state operations and in April, the North West Shelf’s Greater Western Flank Phase 3 project achieved ready-for-startup ahead of schedule.”

O’Neill noted that work had also continued on Woodside’s new energy opportunities.

“Our collaboration with Heliogen has also deepened with our agreement to deploy a 5 MW electric module of the US company’s AI-enabled concentrated solar energy technology in California, as well as jointly market Heliogen’s renewable energy technology in Australia.

“We have launched a carbon capture and utilisation (CCU) collaboration with US-based technology developers ReCarbon and LanzaTech to investigate the viability of a proposed CCU pilot facility in Perth,” she said.