Australia’s largest independent oil and gas company, Woodside Petroleum Ltd (ASX: WPL) witnessed its stock price losing ground by 3.2% on November 14, 2017 as the group has been seen to be left on its own with the exit of the Energy Giant Shell from the register post a $3.5 billion share sale. Shell has been working on its balance sheet and divestment plans ($US30 billion) for quite some time and the exit falls under the purview of this strategy.
Shell was seen to be gradually selling down its stake in the oil player since 2010 and it has now been reported that the deal for the sell-off of 13.28% stake was upgraded after an initial agreement. Primarily, Royal Dutch Shell upsized the selling of 71.6 million Woodside shares for A$31.10 per share to 111.8 million shares for a significant pre-tax proceed, based on a strong demand from institutional investors. The long-term association that started with the Dutch company investing in the North-West Shelf gas venture, is now coming to an end.
Large block trades in 2010 and 2014 were said to have led Shell pull back from presence on WPL’s board, and the rejection of a $2.9 billion selective buyback proposal in 2014 by Woodside shareholders gradually fuelled the plan to exit.
Woodside aims to maintain a close working relationship with Shell given the partnership in the North-West Shelf venture, the Browse and Sunrise LNG projects. It will be crucial to see any impact from the exit of the oil shark based on the reduced stake in Browse LNG. It will also be important to watch out for any movement from the other LNG players including Origin Energy and Oil Search given WPL’s shares being floating in the market.
Meanwhile, Woodside Petroleum’s third quarter 2017 update was a decent one with higher than prior quarter sales revenue of $914m and sales volume of 21.1 MMboe, along with execution of portfolio LNG sales agreement for delivery between 2018 and 2020.
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Development activities (Source: WPL Company Reports)
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