Sydney - AFP
Royal Dutch Shell on Tuesday said it will reduce its stake in Woodside Petroleum, selling Aus$5.3 billion (US$5.0 billion) of stock as it focuses its Australian growth in directly owned assets.
The after-tax sale represents 19.0 percent of Woodside's issued share capital and will leave the global oil giant with around 4.1 percent of the Australian energy company.
"Today's announcement is part of our drive to improve Shell's capital efficiency and to focus our Australia growth in directly owned assets," Shell chief executive Ben van Beurden said.
"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."
It is the biggest deal orchestrated by Van Beurden since he took the reins in January and comes with Shell in the middle of a US$15 billion global asset sale, including Australian refineries and service stations.
Despite the sell-off, Shell Australia chairman Andrew Smith said Perth-based Woodside, which operates six of Australia's seven LNG processing plants, remained a key partner.
"Woodside is an important strategic partner for us, through our investments in established projects such as the North West Shelf and growth opportunities such as Browse," he said.
Woodside chief executive Peter Coleman said the deal would deliver value to shareholders through enhanced cash flow and dividends with fewer shares issued.
"The combined transaction will also increase our liquidity in the market and resolve the uncertainty in relation to Shell's shareholding that has existed for several years," he said.
Shell launched a full takeover of Woodside in 2001 to gain an advantage over its rivals in the scramble to meet demand for clean-burning fuels, but it was blocked by the government on national interest grounds.
Since then, Shell has increasingly flagged its desire to sell, reducing the incentive for other institutional investors to buy into Woodside due to the uncertainty, analysts said.
Coleman said it would be the first time in many years that the company did not have a substantial shareholder on its register.
"We now look very much like most of our peers in the marketplace," he said of the firm, which last month pulled out of the massive Leviathan gas joint venture off the coast of Israel.
"I think that it is a really good thing, the market will be able to fully value us, we will get full value on our ASX (Australian Stock Exchange) listing with respect to our weighting on the index as well."
Trading in Woodside shares was halted until Wednesday pending the release of the announcement.