Shell has announced the sale of a 19% stake in Woodside for around $5 billion (after-tax) in an underwritten sell-down to equity market investors and a selective share buy-back by Woodside. Shell now holds about 4.5% of Woodside after the sale.
About 9.5% of Woodside stake, representing 78.27 million shares, was sold through an underwritten sell-down at a price of A$41.35 per share (US$38.87 per share).
Under an agreement with Shell, Woodside will also buy-back 78.27 million of its shares at a price of US$34.24 per share. The buy-back price per share has been split into a dividend component of US$26.29 per share and a capital component of US$7.95 per share, as agreed with the Australian Taxation Office (NYSE:ATO) in a private ruling.
Shell CEO Ben van Beurden said: "Today's announcement is part of our drive to improve Shell's capital efficiency and to focus our Australia growth in directly owned assets…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."
Shell's global LNG equity liquefaction capacity is 26.1 MMTPA, with interests in eleven LNG plants. The announced transaction will reduce Shell's equity liquefaction capacity to 25.5 MMTPA after the sell-down and to 24.9 MMTPA after completion of the share buy-back.
Shell continues to retain stakes in large upcoming Australian LNG projects including a 25% interest in Gorgon LNG (approximately 15 MMTPA) and 67.5% operating interest in Prelude FLNG project (3.6 MMTPA + 1.7 MMTPA NGLs).
The deal was expected after Shell CEO Ben Van Buerden in Jan-2014 announced a target of $15 billion in asset sales for 2014-15, to improve capital efficiency and strengthen operational performance. The Woodside transaction is the latest in a series of $1 billion+ deals by Shell in 2014.
At the end of Q1-2014, key Australian Deals in Play included Korea Gas planning to sell its stake in GLNG and Origin-ConocoPhillips looking to sell stake in APLNG.
Shell plans to sell $15 billion worth of assets over the next two years, according to a media report released in Jan-2014.
Disclosure: The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.