Memo to Analyze News: Woodside and the Scarborough Project Issues

A MEMO TO ANALYZE THE NEWS
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Subject: A MEMO TO ANALYZE THE NEWS
For the past decades, Woodside has been under intense criticism from environmental advocates due to its push for the Scarborough project, Australia's biggest fossil fuel development for the next decade. However, its deal to merge with BHP will promote its substantial growth, as it would double its substantial oil assets in Mexico and Australia. Woodside shareholders are nervous about rehabilitation obligations, and BHP Petroleum has financial rehabilitation obligations that would fall to Woodside due to BHP struggling to sell its Bass Strait assets. According to the report, Woodside is the acquirer, and BHP Petroleum is the target. The two companies have anticipated having greater financial strength, leading to them becoming more diverse and attracting more wider group of investors. Therefore, the organization players would not only become a worldwide energy transition but also be the best players.
The merger of Woodside and BHP Petroleum finds different corporate finance concepts relevant for long-term success. First, capital budgeting will help in facilitating plan procedures for their gas and oil products to generate more cash flows for a planned decade. Capital budgeting controls cash inflows and outflows, giving the companies a positive integration. Besides, through this concept, the companies could set the project's payback period they intend to initiate. Working capital management is the second concept for these two companies to have a prolonged relationship. The working capital management shows the association between the temporary assets and temporary liabilities of Woodside and BHP Petroleum. The motive of this concept is to guarantee a continuous operation by enabling these companies to settle short-term financial constraints and future operational costs. According...