Woodside CEO Seeks Shell Exit Decision on $6.6 Billion Stake
Woodside Petroleum Ltd. (WPL), Australia’s second-largest oil and gas producer, pressed Royal Dutch Shell Plc (RDSA) to take action on its A$7.3 billion ($6.6 billion) stake in the company, saying investors want “certainty.”
“Everyone would like some clarity on that because it has been out there in the market for about three years,” Chief Executive Officer Peter Coleman said today in an interview in Sydney. “The market is looking for some certainty now.”
Shell, Europe’s largest oil company, flagged last year that it would “eventually” sell the 23 percent holding, raising speculation this may trigger approaches from potential buyers. Woodside stock has slumped in Sydney since Shell sold a 10 percent stake at A$42.23 a share in November 2010.
Investors would view a Shell sale as a positive, Evan Lucas, Melbourne-based strategist at IG Markets Ltd., said today by phone. “The bulls see this as a blue-sky event for Woodside because it releases them from a known overhang.”
Woodside, which hasn’t traded above A$40 since 2011, rose as much as 1 percent to A$38.77 and closed at A$38.60, the highest in a month. The benchmark index gained 0.1 percent.
Woodside, with a market value of A$32 billion, hasn’t talked recently with Shell, its largest shareholder, about The Hague-based company’s plans for the stake, Coleman said.
Shell’s move to accelerate asset sales to free cash for new projects is seen as increasing the likelihood the Anglo-Dutch company will finally divest its remaining stake in Woodside. The company is trying to win investors’ confidence after its fourth-quarter profit fell to the lowest since 2009.
Woodside has talked to Shell in the past about its options, Coleman said. “But at the end of the day, it’s their decision. We’ve said, look, if you want we’re here to help.”
Shell said last year that the Woodside holding doesn’t fit into its long-term plans. Shell is more likely to sell the shares to institutional investors, Vincent Pisani, an analyst at Shaw Stockbroking Ltd. in Melbourne, said in December.
The Australian oil producer is pushing ahead with overseas expansion in countries such as Myanmar after delays at its proposed Browse and Sunrise liquefied natural gas ventures at home. Woodside signed an initial agreement earlier this month to acquire a quarter of Israel’s biggest natural gas field, Leviathan, for as much as $2.6 billion and is considering a potential LNG development on the west coast of Canada.
Woodside faces growing pressure to make an acquisition of as much as $5 billion and may consider buying InterOil Corp. or a stake in Papua New Guinea gas fields from Total SA, Macquarie Group Ltd. analysts said in a report last month. That’s because Woodside appears to have few opportunities to grow with its existing assets, according to the report.
While Woodside would consider investments in Papua New Guinea, the company sees potential assets in the Pacific nation as “fully priced,” Coleman said.
“What we need to be doing is looking for things that have a very clear line of sight to monetization, and the earlier that monetization is, the better for us,” he said.
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