A new energy company is on the horizon, as Australia's Woodside Petroleum and BHP Group unite to create a new global energy company.

"Merging Woodside with BHP’s oil and gas business delivers a stronger balance sheet, increased cash flow and enduring financial strength to fund planned developments in the near term and new energy sources into the future," says CEO and Managing Director at Woodside Meg O'Neill in a joint statement.

BHP and Woodside's commitment deed outlines that both companies would combine their oil and gas portfolios by "an all stock merger" and thus create a "global top 10 independent energy company by production", according to the companies.

The new expanded Woodside would be majority-owned by the existing Woodside shareholders with 52 percent, and 48 percent will be owned by existing BHP shareholders.

"The transaction is subject to confirmatory due diligence, negotiation and execution of full form transaction documents, and satisfaction of conditions precedent including shareholder, regulatory and other approvals."

Both companies expect that joining forces will lead to a strong growth profile and greater financial resilience, according to the realease.

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