The penalty represents some 25% of what was committed as part of an agreed work program, Canadian media reported overnight.
"Woodside Energy commenced a comprehensive review of the newly combined portfolio of assets and, based on a determination that the Orphan Basin assets are not a strategic fit with Woodside's overall energy exploration portfolio, has decided not to pursue exploration drilling," a spokesperson confirmed to Energy News today.
She said the company would leave the permits.
BHP moved there in November 2018 taking two permits in the Orphan Basin, joining Chevron and Shell in the frontier area.
Its full bid of US$625 million covered drilling and seismic work required by the exploration work program as part of the licence agreement over a six year term, with its minimum commitment under the agreement $157 million. It was one of the largest-ever commitments in the area offshore Canada.
The Newfoundland and Labrador Offshore Petroleum Board awarded 100% exploration rights and operatorship for Blocks 8 and 12.
However Woodside chief Meg O'Neill has been clear she has no interest in frontier exploration and plans only to drill in areas where discoveries can be rapidly commercialised.
It is a 180 compared to the optimism of 2018 when then-BHP president operations petroleum Steve Pastor called it an exciting opportunity for the company to explore for world class assets in the prospective region.
"This frontier opportunity has large oil resource potential which we identified through our global petroleum endowment study in 2016," Pastor said.
"It is a low-risk country with competitive fiscal terms.
The basin spans 160,000sq.km and has had only seven wells drilled, between 1974 and 1985.
In January last year BHP was approved by the Canadian government for its offshore drill plans.
The Canadian regulator had also approved plans by Chevron Corporation and Equinor.
In 2020 the local government was disappointed that its frontier lands, which had enticed many supermajors just years before, saw only one bid for 17 acreage parcels offered.
Only BP made a bid and for only C$27 million (A$28.4 million).
BHP was to drill this year.
Last year Woodside walked away from the troubled Kitimat LNG project, also in Canada.