Woodside’s planned purchase of BHP’s oil and gas assets has been judged fair and reasonable to the oil and gas heavyweight’s shareholders, as they get ready to vote on the deal in May.

The tie-up will take Woodside’s market capitalisation to about $63 billion, making it one of the10 biggest companies in Australia

An independent report by KPMG, released on Friday, concluded that a Woodside share would have an underlying value of between $23.09 and $26.42 if the merger did not proceed, and between $25.25 and $29.81 if it did.

Credit Suisse energy analyst Saul Kavonic said in a note to clients said that he did not see the independent estimate of Woodside’s share price being below the current share price of $32.40 as a concern, and ascribed it to different discount rates applied to future cashflows.

However, Mr Kavonic’s initial assessment of the voluminous report released during trading was mildly negative with less evidence of a value upside from BHP assets than he expected, citing concerns about production levels and decommissioning costs.

The Perth-based energy specialist’s shareholders will vote on the deal at the company’s annual general meeting on May 19. They will hold 52 per cent of the merged entity, if the merger is approved, while BHP shareholders will have new scrip for 48 per cent of Woodside.

KPMG concluded that the 52/48 split was broadly consistent with the value Woodside’s assets brought to the deal. The report, commissioned by Woodside, does not say whether the transaction is in the best interests of BHP shareholders, who do not have a vote on the deal.

Woodside expects to save about $400 million a year from merger synergies, including cutting exploration expenditure by $150 million a year.

The KPMG report noted that oil and price volatility from the Russia-Ukraine war, the continuing effect of the COVID-19 pandemic and raising concerns about the effect of fossil fuels on the climate all made a value assessment difficult.