The London Stock Exchange has a new giant and it’s a business worth keeping an eye on | Business Newsletter

In just one night, a huge new company was listed on the London Stock Exchange.

Shares in Woodside Energy, based in Perth, western Australia, were admitted to the main list and enjoyed a healthy first day premium, up from an opening price of 1800p. peaked at 1992.8p at lunchtime.

The company is valued at less than £36 billion at current prices.

Woodside may not be a household name in the UK but it is certainly in Australia.

Founded in 1954 as an oil and gas company and taking its name from the nearby town of Victoria, it was a pioneer in offshore oil production, setting world records for depth which it drilled under the seabed of South Australia.

It continued to be a professional producer of liquefied natural gas and offshore oil in the following decades, in which partners Shell and BHP – the Australian mining giant – each became the 40% shareholder.

In fact, Shell’s attempt to buy back other shareholders for $10 billion was blocked by the Australian government in 2001. Both it and BHP subsequently sold off their shares.

Fast-forward to last year when BHP, before that offloading US shale assetsannounced that it will abandon its dual listing structure and move its primary share listing to Australia – giving up its status as the largest company in the FTSE 100 in the process.

The announcement comes with news that BHP, which has sought to buy Woodside in the past, will sell its remaining oil and gas assets to Woodside.

That deal was completed last Wednesday and in the process has created one of the 10 largest independent energy companies in the world by producing hydrocarbons.

Meg O’Neill, chief executive officer of Woodside, said: “Today, Woodside begins its journey as a global company, becoming the greater supplier of energy the world needs right now. now and will continue to request in the future.”

“The merger brings together a diverse portfolio of quality operating assets, coupled with a range of growth opportunities in oil, gas and new energy that promise to deliver continued value to our shareholders.” our east.

“We believe completing the merger will allow Woodside to play a more important role in the imperative energy transition as we respond to climate change while ensuring a reliable energy supply. reliable and affordable for a growing and aspirational global population.”

With BHP shareholders emerging with a 48% stake in the expanded business, that means many UK investors will now have a stake in Woodside.

So what do they get?

As one might expect, Woodside’s assets are heavily skewed towards Australia, including Pluto, which takes gas from the Pluto and Xena offshore gas fields in western Australia and converts it to liquefied natural gas (LNG). , most of which are shipped to customers in Japan.

It also owns just over a third of the North West Shelf, just off the country’s northwest coast, the massive natural gas project said to be Australia’s largest-ever resource project. and where Woodside first partnered with Shell – a fellow shareholder – back in 1971.

The company’s biggest current growth project is currently the Scarborough gas field off the west coast of Australia.

Further afield, Woodside also owns stakes in the Angostura oil and gas field off the coast of Trinidad, the Shenzi oil and gas field off the Louisiana coast in the Gulf of Mexico, where the company is also a minority shareholder in Mad Dog and Atlantis, the The oil and gas fields are both operated by BP.

There is also interest in the Sangomar oil field in Senegal, which, according to O’Neill, is the ideal field to replace Russian crude that will no longer reach refineries in Europe.

Woodside is also in the process of building non-oil projects that, like companies like BP and Shell, are looking to pivot away from hydrocarbons.

It has invested in three separate hydrogen and ammonia projects in Perth, Tasmania and Oklahoma, and in solar projects in California and in western Australia.

The rationale for the merger is that the expanded Woodside group will be more geographically diverse, with 15% operations in the US Gulf of Mexico and 5% in Trinidad and Tobago, and more diversified in products, with 29% Quantity. coming from oil and condensate.

This is basically an investment in the LNG sector. LNG still accounts for 46% of aggregate production in the new group.

And that makes it a more exciting investment game than it was at the start of the year.

Russia’s invasion of Ukraine has spurred many countries’ determination to cut back on Russian gas – and for many, that means buying LNG, a commodity for which Australia is the world’s largest producer by volume. , just ahead of Qatar and the US. .

Even before the Ukraine war, global LNG demand was predicted to more than double in volume between 2021 and 2050, reflecting declining gas production in Europe and some parts of the country. Asia.

Australia, thanks to existing long-term supply contracts with many Asian customers, has been found to be most likely to benefit from that increase in demand.

The question for investors is whether much of this has already been valued.

Woodside Australian shares have gained 45 per cent in value since the start of the year but much of the share price’s strength has been in the past few weeks and may reflect the fact that some Sydney investors had previously ‘short sold’ ‘ Woodside. shares – sold before a major share issue by petroleum trading company BHP – were recently bought to close these positions.

So a lot of value could have been in the Woodside stock price. However, this will be a business worth keeping an eye on.