Shell share price: Company cuts stake in Australia’s Woodside

on Jun 17, 2014
Updated: Apr 9, 2020
Listen, Tuesday, June 17: Royal Dutch Shell Plc (LON:RDSA) is cutting its stake in Australian oil and gas group Woodside Petroleum (ASX:WPL), the European energy group has said. The long-awaited sale, part of Shell’s strategy to shed non-core assets and slash spending, will fetch about $5 billion (£3 billion).

Shell’s share price closed 0.2 percent higher at 2,383.84p in London yesterday.
**Shell sells shares in Woodside**
Shell said this morning in a statement that it was selling about 156.5 million shares in Woodside for around $5 billion on an after-tax basis. The sale, which represents 19 percent of Woodside’s issued share capital, is through an underwritten sell-down to equity market investors and a selective share buy-back by Woodside. The transaction will leave Shell with a 4.1 percent stake in Woodside.

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“Today’s announcement is part of our drive to improve Shell’s capital efficiency and to focus our Australia growth in directly owned assets”, Shell’s chief executive Ben van Beurden explained in the statement.
Van Beurden, who took the helm at Shell earlier this year, has stepped up non-core asset disposals amid investor pressure to cut spending and improve shareholder returns. In January, the company agreed to sell its stakes in a liquefied natural gas (LNG) project in Western Australia. (Shell share price: Group confirms Aussie assets sale)

Shell had long been expected to shed its 23.1 percent stake in Woodside, a legacy from the European company’s takeover bid in 2001 which was rejected by the Australian government on the grounds that it might slow gas development in the country.
Morning Star analyst Mark Taylor told the Financial Times the deal was positive for Woodside as it removed the overhang of Shell’s shareholding.

“I’m pleased Woodside spent their money on a buyback, which is earnings accretive, rather than investing in the Leviathan gas project in Israel – a region where they have little experience,” he pointed out. “That could have been distracting.”

The buyback, which is pending approval by Woodside shareholders, is expected to complete in early August.
**LNG growth**
Despite series of the disposals Down Under, Shell reaffirmed its commitment to Australia, noting that the country would underpin the company’s next tranche of LNG growth. Shell has a 25 percent holding in the Gorgon LNG project, as well as a 67.5 percent operating interest in the Prelude floating LNG project.
Van Beurden added in today’s statement that the Woodside stake sale did not change the company’s “view of Australia as an important player on the global energy stage, or Shell’s central role in the country’s energy industry”.
**On June 16, buy Shell shares at 2,381.00p.**
**On June 16, sell Shell shares at 2,380.00p.**


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