The biggest oil company on the territory of Europe – Royal Dutch Shell Plc made an official statement today, revealing that it is to sell the majority of its 23% stake in the Australian company Woodside Petroleum Ltd for 6.1 billion Australian dollars (5.7 billion dollars).
78.3 million shares of Woodside would be sold by Shell to investors. The announcement comes at a time when Woodside Petroleum Ltd, which is based in Australia, is making plans for the same amount of stock buyback. This makes an about 19% stake of Woodside. According to the official statement of Royal Dutch Shell, a 4.5% stake in the Australian company would be held.
Mr. Ben van Beurden, who is the Chief Executive Officer of Royal Dutch Shell said in the companys statement, which was cited by the Wall Street Journal: “Todays announcement is part of our drive to improve Shells capital efficiency and to focus our Australia growth in directly owned assets. It doesnt change our view of Australia as an important player on the global energy stage, or Shells central role in the countrys energy industry.”
Currently, the Chief Executive Officer of Shell has been focused on accelerating asset sales in order to free up cash that is intended to be invested in new projects and takeovers until the end of 2014. In May this year the Chief Executive Officer of Woodside Mr. Peter Coleman stoke a deal to invest about 2.6 bullion dollars in a natural gas project located in Israel. Mr. Coleman commented that the buyback is not expected to influence on the companys capacity of further acquisitions.
As reported by the Financial Times, half of the 19% shareholding that is being sold by Shell is planned to be bought back by Woodside at the price of 36.49 Australian dollars per share. Another part of 78 million shares are to be sold to institutions at the price of 41.35 Australian dollars a share. The transaction is secured by Goldman Sachs and Citigroup.
The portfolio manager Mr. Tim Schroeders, who works at Pengana Capital Ltd commented on the situation in a telephone interview for Bloomberg today: “Woodside is master of its own destiny without that encumbrance. This breaks up an overhang people have been aware of for a long time and allows both companies to move forward with their own strategies.”
Royal Dutch Shell Plc was adding 0.20% to trade at 2383.84 pence per share by 7:08 GMT, marking a one year change of +13.35%.
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