Shell Sells Stake in Woodside for $5.32 Billion

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By Vittorio Hernandez | June 17, 2014 11:40 AM EST

Oil giant Royal Dutch Shell is selling its majority shares in Woodside Petroleum for $5.32 billion after tax. That is equivalent to 157 million shares out of 190 million, in effect reducing its stake in the oil and gas company to 4.5 per cent from 23 per cent.


Royal Dutch Shell shares took a knock after the report that its Nigeria business was weakening on heightened security concerns (Reuters)

"Today's announcement is part of our drive to improve Shell's capital efficiency and to focus our Australian growth in directly owned assets," ABC quoted Ben van Beurden, Shell chief executive.

In offloading its shares of Woodside, van Beurden said it does not mean it lacks confidence in the Australian oil and gas giant as key energy producer.

"It doesn't change our view of Australia as an important player on the global energy stage, or Shell's central role in the country's energy industry.

Woodside would buy back half of the shares at $2.85 billion, which represents 9.5 per cent of the issued capital shares. That would mean Woodside is buying it at a 14 per cent discount of $39.49 per share on the average price of the stock in the five days leading to June 16.

The remaining 78.27 million shares will be sold to institutional investors by two investment banks at $41.35 a share.

Woodside Petroleum Chief Executive Peter Coleman said the sale and buy-back would deliver value to shareholders by enhanced earnings, cash flow and dividends per share.

"This combined transaction is an efficient and disciplined use of capital and creates value for all our shareholders ... In parallel, it allows us to optimize the company's near-term capital structure, while maintaining the capacity to continue to develop existing projects and make additional investments in new growth opportunities," he added.

YouTube/ABC News (Australia)

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Royal Dutch Shell shares took a knock after the report that its Nigeria business was weakening on heightened security concerns (Reuters)
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