Shell sells Woodside stake for $2.7 billion

Royal Dutch Shell expects on Tuesday to add another $2.7 billion (A$3.5 billion) piece to its three-year, $30 billion divestment program, as the oil and gas major sells its stake in Australia’s Woodside Petroleum to equity investors, Kallanish Energy reports. 

The agreement to sell 111.8 million shares or its 13.28% stake in Woodside equity capital was announced by Shell Monday. The firm said the buyers, two undisclosed investment banks, will pay A$31.10 per share, with sale completion expected today and settlement on Nov. 16.

The transaction, through Shell Energy Holdings Australia Ltd. (SEHAL) was announced in two statements – one with the sale of 71.6 million shares, another with the upsizing of the sale totaling the 13.3% stake the company held in Woodside. That’s due to “strong demand from institutional investors,” Shell said.

"This sale is another step towards the completion of our three-year $30 billion divestment program, which is an important part of our strategy to reshape Shell, to deliver a world-class investment case, and to strengthen our financial framework,” Shell chief financial officer Jessica Uhl said. “Proceeds from the sale will contribute to reducing our net debt.”

Shell began diluting its 34.37% interest in the Australian oil company in 2010 due to its decision not to participate in Woodside’s dividend re-investment program.

Last year, the Anglo-Dutch major concluded a change in Shell's level of involvement in Woodside's financial and operating policy decisions resulted in Shell no longer having significant influence.

Its classification was then changed from an associate (carrying amount: $2.14 billion) to an investment in securities (carrying amount at fair value: at change in classification in Q2 2016 $2.44 billion).

Shell still maintains a significant presence in Australia through interests in eight companies, including the operated QGC venture and Prelude FLNG project, as well as Gorgon LNG and Arrow Energy.