Shell Sells 10 Percent Stake in Woodside Petroleum
Royal Dutch Shell Plc, Europe’s largest oil company, is selling a 10 percent stake in Woodside Petroleum Ltd. for $3.35 billion, freeing up funds to support a six-fold increase in its Australian natural gas production.
Shell is selling 78.34 million shares in Australia’s second-largest oil and gas producer at A$42.23 a share, retaining 24.27 percent of Woodside, The Hague-based company said in a statement today. UBS AG is arranging the transaction, which is priced at an 8.6 percent discount to Perth-based Woodside’s Sydney close of A$45.86.
Shell Chief Executive Officer Peter Voser is selling as much as $8 billion in assets this year and next, cutting 7,000 jobs and reducing the less profitable refinery business. Today’s sale announcement prompted speculation that Woodside may become an acquisition target.
“Given that Shell has the intent to sell down, they may not stand in the way of a Woodside takeover,” said Jason Teh, who helps manage A$3 billion ($3 billion) at Investors Mutual Ltd. in Sydney, which holds Woodside shares. “It looks like Shell is selling out from what they consider something more mature to help it develop something more fledgling.”
Woodside may be an acquisition target for BHP Billiton Ltd. after its $40 billion offer for Potash Corp. of Saskatchewan Inc. was blocked by Canada, UBS analysts said last week.
PetroChina, Chevron
BHP spokeswoman Amanda Buckley declined to comment on Shell’s sale of a Woodside stake. Roger Martin, Woodside’s Perth-based spokesman, couldn’t immediately be reached by phone or e-mail to comment.
Shell aims to spend as much as $50 billion in Australia over the next decade, more than in any other region, as the company shifts to producing natural gas instead of oil. Shell and PetroChina Co. in August completed a A$3.5 billion purchase of Arrow Energy Ltd. to develop a liquefied natural gas venture in Queensland fed by fuel extracted from coal seams.
Shell is a partner in Chevron Corp.’s Gorgon LNG venture in Western Australia and with Woodside in the Northwest Shelf. It plans to use floating LNG technology to develop the Prelude gas field off the country’s northwest.
“Our Australian LNG portfolio has developed rapidly in recent years, with exploration success around Gorgon and Prelude, and our entry into coal bed methane plays through the joint acquisition of Arrow Energy,” Voser said in the statement.
‘Funding Needs’
Shell’s directly owned LNG capacity in Australia is 2.7 million metric tons a year and is forecast to more than double to 6.5 million tons by 2015, Australia country chair Ann Pickard said in the statement. That could increase by a further 10 million tons beyond 2015 to 16 million, she said.
“Shell has a global LNG portfolio and is probably working out the funding requirements associated with it,” said Teh. “They’ve been a long-term investor in Woodside in the development of the Northwest Shelf, and recently bought out Arrow Energy, which has the potential to become an LNG development.”
Australia is set to underpin Shell’s next tranche of LNG expansion, aimed at growth markets in Asia Pacific, the company said today. Shell has a 25 percent interest in Gorgon, where Exxon Mobil Corp. is also a partner.
“We have seen Shell on the front foot with other Australian projects, so they want to carve out their own path in the country,” Johan Hedstrom, an analyst at Southern Cross Equities, said by phone from Sydney. “The bulk of Shell’s holdings in Woodside were acquired for much lower prices a long time ago,” he added.
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