Shell opts for full exit from Woodside ownership

Royal Dutch Shell PLC has opted for a complete exit from the Woodside Petroleum Ltd. share register just hours after an initial agreement to sell 64% of its holdings.

Royal Dutch Shell PLC has opted for a complete exit from the Woodside Petroleum Ltd. share register just hours after an initial agreement to sell 64% of its holdings (OGJ Online, Nov. 13, 2017).

Shell changed its strategy overnight and made a deal to finally sell its full 13.28% interest for $3.5 billion (Aus.), leaving Woodside as a fully independent company for the first time in more than 30 years.

Late on Nov. 13 Shell said it had entered an underwriting agreement with two investment banks to sell 71.6 million shares in Woodside—64% of its interest in the company—for $31.10 (Aus.)/share.

Soon afterwards Shell announced it had increased the deal to 111.8 million shares—its entire stake—following strong demand from institutional investors.

Analysts say that local institutions saw it as a chance to bring a top 20 company into the market. The fact that the second block of shares entered the market so quickly highlighted the positive view of oil. Investors are confident and optimistic.

Others say the deal came as little surprise as Shell had progressively sold down its Woodside stake over the last 7 years. The moves followed Shell’s failed attempt to take over Woodside in 2001 for $10 billion—an attempt that was blocked by then Australian Treasurer Peter Costello on national interest grounds.

Shell sold 10% interest in Woodside in November 2010 and another 9.5% in June 2014.

Shell will remain a joint venture partner in two Woodside-operated LNG projects off Western Australia—the North West Shelf Gas Project and the Browse Project, retaining a 16.7% and 27% interest respectively. Shell also will remain a 26.6% interest holder in the Woodside-led Sunrise LNG Project in the Timor Sea.

Woodside Chief Executive Officer Peter Coleman said his company will maintain a close working relationship with Shell as a joint venture partner and a customer of Shell technology.

Shell said the sale is another step towards the completion of its 3-year, $30-billion divestment program, seen as an important part of its strategy to reshape Shell and strengthen its financial framework.

Settlement of the deal is expected by Nov. 16. Proceeds from the sale will contribute to reducing Shell’s debt.

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