Shell Sells 19% of Woodside

Royal Dutch Shell announced the sale of 19% of Woodside’s issues share capital, for an estimated value of around US$5.0 billion on an after tax basis.  

Under the agreement, Australia’s Woodside will buy-back half of the shares from Shell. The remaining shares are to be sold to ‘a range of equity market investors.’ 

For Tuesday, the securities of Woodside will be placed in Trading Halt Session State. 

“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 Officer Ben van Beurden said in a note released on Tuesday. 

BACKGROUND: LNG AND LEVIATHAN 

As a consequence of the agreement, Shell’s world-wide LNG equity liquefaction cap action will decrease from 26.1 mtpa to 24.9 mtpa after the completion of the agreement.

On Monday, BP released a report saying that LNG’s share of global gas trade declined to 31.4%. While pipeline shipments grew by 2.3% in 2013, natural gas trade grew by 1.8%. 

As already discussed several times, the Russian pricing strategy is making many LNG facilities and other projects unprofitable.

Last month, the Australian company terminated the non-binding Memorandum of Understanding signed in February 2014 for a 25% participating interest in two offshore licences in Israeli waters.