A $3.5bn Royal re­treat

Shell off­loads last Wood­side stake

Herald Sun - - BUSINESS DAILY - JOHN DAGGE EN­ERGY john.dagge@news.com.au

ROYAL Dutch Shell has sold out of Wood­side Petroleum, end­ing a pres­ence of more than 30 years on the reg­is­ter of Aus­tralia’s big­gest stand-alone oil and gas pro­ducer.

Shares in Wood­side slumped more than 3 per cent yes­ter­day af­ter the An­gloDutch en­ergy ti­tan con­firmed it had sold its fi­nal 13.3 per cent stake for $3.5 bil­lion.

Shell moved to sell off 8.5 per cent of its Wood­side stake late on Mon­day but de­cided to off­load its en­tire hold­ing amid stronger-than-ex­pected de­mand from in­sti­tu­tional in­vestors.

It sold out at $31.10 a share — a 3.5 per cent dis­count to Mon­day’s clos­ing price.

Wood­side chief Peter Cole­man said the com­pany would con­tinue to have a close work­ing re­la­tion­ship with Shell, not­ing the global en­ergy heavy­weight re­mained a part­ner in its North West Shelf and Browse projects off the coast of Western Aus­tralia.

The duo are also part­ners at the stalled Sun­rise de­vel­op­ment in the Ti­mor Sea.

“Wood­side’s strong and long­stand­ing re­la­tion­ship with Shell will con­tinue fol­low­ing to­day’s di­vest­ment,” Mr Cole­man said.

“Wood­side will main­tain a close work­ing re­la­tion­ship with Shell — as a joint ven­ture part­ner and cus­tomer of Shell tech­nol­ogy — and we recog­nise that Shell will al­ways be part of our his­tory.”

The sale is the lat­est un­der­taken by Shell, which launched a $US30 bil­lion as­set sales pro­gram fol­low­ing its ac­qui­si­tion of ri­val Bri­tish gas and oil com­pany BG Group in 2015.

Shell part­nered with Wood­side in the early 1960s to de­velop the North West Shelf oil and gas ven­ture, pro­vid­ing its Aus­tralian part­ner with the tech­ni­cal skills needed to de­velop one of the na­tion’s big­gest ever re­source projects.

It has been look­ing to sell out of Wood­side for a num­ber of years, clas­si­fy­ing the stake as “avail­able for sale” in its 2016 ac­counts.

Its de­ci­sion to pull the trig­ger on its lat­est and fi­nal sale comes af­ter Wood­side’s share price climbed more than 11 per cent over the past three months.

“This sale is an­other step to­wards the com­ple­tion of our three-year, $US30 bil­lion di­vest­ment pro­gram,” Shell chief fi­nan­cial of­fi­cer Jes­sica Uhl said.

That scheme was “an im­por­tant part of our strat­egy to re­shape Shell, to de­liver a world-class in­vest­ment case and to strengthen our fi­nan­cial frame­work”, Ms Uhl said. “Pro­ceeds from the sale will con­trib­ute to re­duc­ing our net debt.”

Shell has twice sought to take over Wood­side, team­ing with BHP to make its first play in the mid-1980s.

It launched a sec­ond bid to take over Wood­side in 2000 with the $10 bil­lion of­fer timed to take ad­van­tage of an Aussie dol­lar that was then trad­ing around the US50c mark.

For­mer fed­eral trea­surer Peter Costello re­jected the of­fer amid con­cerns the North West Shelf as­sets would be starved of at­ten­tion if they be­came part of Shell’s vast global port­fo­lio.

Wood­side ran the na­tion’s only liq­ue­fied nat­u­ral gas plant at the time.

Shell sold an­other 10 per cent in late 2010, net­ting it $3.3 bil­lion.

It cut its stake by an­other 9.5 per cent in mid-2014 in a sale that ended its abil­ity to nom­i­nate direc­tors to the Wood­side board.

Shell planned to cut its stake fur­ther but a pro­posed se­lec­tive buy­back en­dorsed by the Wood­side board was re­jected by share­hold­ers.

Shares in Wood­side fell by $1.04, or 3.2 per cent, to $31.20 yes­ter­day.

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