Woodside Petroleum : Independent Expert Report

ASX Announcement	Woodside Petroleum Ltd.
ACN 004 898 962
Mia Yellagonga
Friday, 8 April 2022	11 Mount Street
Perth WA 6000
ASX: WPL	Australia
OTC: WOPEY	T [phone]
www.woodside.com.au

INDEPENDENT EXPERT REPORT

Attached is the Independent Expert Report for the proposed merger between Woodside and BHP's petroleum business.

The report should be read in conjunction with the Explanatory Memorandum released to the ASX today.

Contacts:

INVESTORS	MEDIA
Damien Gare	Christine Forster
W: [phone]	M: [phone]
M: [phone]	E:[e-mail]
E:[e-mail]

This ASX announcement was approved and authorised for release by Woodside's Disclosure Committee.

kpmg

KPMG Corporate Finance

A division of KPMG Financial Advisory Services (Australia) Pty Ltd

Australian Financial Services Licence No. 246901 Level 8

ABN: 43 007 363 215 Telephone: [phone] Facsimile: [phone]www.kpmg.com.au

235 St Georges Terrace Perth WA 6000

GPO Box A29 Perth WA 6837 Australia

The Directors Woodside Petroleum Ltd Mia Yellagonga

11 Mount Street Perth WA 6000

8 April 2022

Dear Directors

Independent Expert Report and Financial Services Guide

Part One - Independent Expert Report

1

Introduction

On 16 August 2021, Woodside Petroleum Ltd (Woodside) announced that it was engaged in discussions with BHP Group Limited (BHP) regarding a potential merger involving BHP's petroleum business (the Initial Announcement).

On 17 August 2021, Woodside and BHP jointly announced that they had entered into a merger commitment deed whereby, subject to confirmatory due diligence and the negotiation and execution of full form transaction documents, they would combine their respective oil and gas portfolios by way of an all-stock merger (the Proposed Transaction).

On 22 November 2021, Woodside announced that it had entered into a binding share sale agreement (SSA) with BHP in relation to the Proposed Transaction.

Under the Proposed Transaction, Woodside will acquire 100% of the issued share capital of BHP Petroleum International Pty Ltd (BHP Petroleum)1 with an effective date of 1 July 2021

(Effective Date), in exchange for the issue of 914,768,948 new ordinary shares in Woodside, which will be distributed in-specie as a dividend on a prorated basis to BHP shareholders (the Merger Consideration).

Prior to completion, Woodside and BHP Petroleum will carry on their respective businesses in the normal course.

1 References to BHP Petroleum include relevant BHP Petroleum controlled entities

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On completion:

•  BHP will transfer to Woodside 100% of the issued capital of BHP Petroleum on a cash and debt-free basis, based on the balance sheet at the Effective Date, subject to various exclusions including certain legacy assets and liabilities that will remain with BHP

•  BHP shareholders will hold approximately 48% of the issued capital in the post-merger Woodside2 (the Merged Group)3, which will remain listed on the Official List of ASX Limited (ASX) and will seek secondary listings on the New York Stock Exchange (NYSE) and the London Stock Exchange (LSE)

•  BHP will make a cash payment to Woodside for the net cash flow generated by BHP Petroleum between the Effective Date and completion4

•  Woodside will make a cash payment to BHP in relation to cash dividends paid by Woodside between the Effective Date and completion that would have been received by BHP had the Merger Consideration been paid on the Effective Date.

BHP has agreed to certain exclusivity arrangements with Woodside. These arrangements do not restrict BHP from considering superior proposals for BHP Petroleum in prescribed circumstances. Woodside has agreed to similar exclusivity arrangements in connection with any competing proposal for Woodside.

Completion of the Proposed Transaction requires the satisfaction of various conditions precedent and the approval of Woodside shareholders (Woodside Shareholders)5 under ASX Listing Rule 7.1.

The directors of Woodside (Directors) have, subject to the satisfaction of various conditions precedent, including an independent expert concluding, and continuing to conclude, that the Proposed Transaction is in the best interests of Woodside Shareholders, unanimously recommended Woodside Shareholders vote in favour of the Proposed Transaction and as at the date of this report have not withdrawn that support.

The Proposed Transaction is described more fully in section 5 of this report and in sections 3 and 10 of Woodside's Merger Explanatory Memorandum (Explanatory Memorandum) to which this report is attached.

2 Woodside shares that would otherwise have been issued to "Ineligible Foreign Shareholders", being a BHP shareholder whose address shown in the register of members of BHP is in a jurisdiction where BHP determines (acting reasonably and following consultation with Woodside) that it would be unlawful, unduly impracticable (in each case in respect of either BHP or Woodside) to distribute the new Woodside shares, will be sold by a nominated sales agent and the net proceeds after costs remitted to the relevant BHP shareholder and potentially "Selling Shareholders" where BHP may, at its discretion, offer Selling Shareholders a voluntary sale facility, whereby BHP Shareholders with less than a certain number of BHP Shares may elect for Woodside shares that would otherwise be issued to them to be sold and the sale proceeds remitted to that Selling Shareholder 3 which will comprise the combined oil, natural gas and natural gas liquids asset portfolios of Woodside and BHP Petroleum

• 4 or, if that amount is negative, Woodside will make a cash payment to BHP

• 5 Woodside has obtained relief from the Australian Securities and Investments Commission (ASIC) in relation to the operation of section 606 of the Corporations Act (the Act) with the result that shareholder approval is not being sought for the purpose of item 7 of s611 of the Act.

Woodside is an Australian integrated supplier of energy, holding a portfolio of operated and non-operated production, development and exploration oil, gas and liquefied natural gas (LNG) upstream/midstream projects. Woodside's principal petroleum assets include:

•  its 16.67% operating interest in the North West Shelf Project, Western Australia (NWS Project), producing LNG, pipeline natural gas, condensate and liquefied petroleum gas (LPG)

•  its 90% operating interest in the Pluto LNG Project, Western Australia (Pluto LNG), producing LNG, pipeline natural gas and condensate

•  its 60% and 33.33% respective operating interests in two floating production, storage and offloading (FPSO) vessels operating offshore Western Australia (Australia Oil), producing oil and gas

•  its 13% non-operating interest in the Wheatstone LNG project, Western Australia (Wheatstone LNG), producing LNG, pipeline natural gas and condensate, including from the Julimar-Brunello Project in which Woodside holds a 65% interest.

Woodside also has a number of advanced development projects in progress, including amongst others, the separate developments of the Scarborough gas resources located offshore Western Australia, the onshore Pluto Train 2 LNG processing facility and the Sangomar oil and gas field located offshore Senegal. In addition, Woodside holds an interest in a number of other Australian and international longer-term development/exploration assets.

Woodside also carries on marketing, trading and shipping activities and is developing a new energy business which is focused on maturing a portfolio of hydrogen and ammonia opportunities in Australia and internationally.

As at 24 March 2022, Woodside had a market capitalisation of A$32,668 million6.

BHP is the world's largest diversified natural resources company by market capitalisation with over 80,000 employees and contractors, operating in over 90 locations around the world.

BHP Petroleum holds conventional oil and gas assets in the US Gulf of Mexico (GOM), Australia, Trinidad and Tobago, Algeria7 and Mexico, as well as appraisal and exploration options in Egypt, Trinidad and Tobago, central and western GOM, Eastern Canada and Barbados.

The Directors have requested KPMG Financial Advisory Services (Australia) Pty Ltd (of which KPMG Corporate Finance is a division) (KPMG Corporate Finance) prepare an Independent Expert Report (IER) to Woodside Shareholders in relation to the Proposed Transaction. The purpose of the IER is to set out whether, in our opinion, the Proposed Transaction is in the best interests of Woodside Shareholders as a whole.

• 6 All amounts are stated in Australian dollars (A$ or AUD) unless specifically noted otherwise

• 7 BHP Petroleum is currently in the process of divesting its Algerian assets. The treatment of the Algerian assets is discussed in more detail in Section 9.2.8 below.

The specific terms of the resolutions to be approved by Woodside Shareholders in relation to the Proposed Transaction are set out in the Notice of Annual General Meeting and Explanatory Memorandum to which this report is attached (together the Meeting Documents).

The sole purpose of this report is an expression of the opinion of KPMG Corporate Finance as to whether the Proposed Transaction is in the best interests of Woodside Shareholders. This report should not be used for any other purposes or by any other party. Our opinion should not be interpreted as representing a recommendation to Woodside Shareholders to either vote for or against the Proposed Transaction, which remains a matter solely for individual Woodside Shareholders to determine.

This report should be considered in conjunction with and not independently of the information set out in the Meeting Documents in their entirety.

KPMG Corporate Finance's Financial Services Guide is contained in Part Two of this report.

2

Technical Requirements

There is no statutory requirement for Woodside to commission an IER in the present circumstances. However, it is a condition precedent to the Proposed Transaction that an IER is obtained, and the Directors recommendation of the Proposed Transaction is subject to, amongst other things, an independent expert concluding, and continuing to conclude, that the Proposed Transaction is in the best interests of Woodside Shareholders.

Accordingly, the Directors have engaged KPMG Corporate Finance to prepare an IER setting out whether, in our opinion, the Proposed Transaction is "in the best interests" of Woodside Shareholders taken as a whole.

2.1

Basis of assessment

In undertaking our work, we have referred to guidance provided by ASIC in its Regulatory Guides, in particular Regulatory Guide 111 'Content of expert reports' (RG 111) which outlines the principles and matters which it expects a person preparing an IER to consider.

Whilst RG 111 focuses principally on reports prepared for change of control transactions, it notes that the principles set out in the guide may be relevant to independent expert reports commissioned for other purposes. It also provides that in deciding on the appropriate form of analysis for a report, an expert should bear in mind that the main purpose of the report is to adequately deal with the concerns that could reasonably be anticipated of those persons affected by the proposed transaction.

Having regard to the purpose of our report, we consider that the principal matter required to be considered by us in assessing whether the Proposed Transaction is "in the best interests" of Woodside Shareholders, is whether the proposed transaction is "fair and reasonable" to Woodside Shareholders. RG111.18 notes in the context of a change of control transaction that:

•  'fair and reasonable' is not regarded as a compound phrase

•  an offer is 'fair' if the value of the consideration is equal to or greater than the value of the shares subject to the offer

•  an offer is 'reasonable' if it is 'fair'