Shell (RDS.A) to Offload Woodside Stake for $2.7 Billion

Moving ahead with its divestment goals, European oil giant Royal Dutch Shell plc RDS.A is set to vend its entire holding in Australian LNG operator Woodside Petroleum Limited WOPEY. Shell entered into an underwriting agreement with two investment banks to sell 111.8 million shares (representing 13.28% of Woodside’s issued capital) for $2.7 billion. The deal is expected to close by Nov 16.

The Anglo-Dutch giant has been divesting stakes in Woodside for quite some time now. In November 2010, the company sold 10% of the issued capital of Woodside, reducing its holding in the company to 24.27%. In 2014, it sold 78.27 million shares, bringing down its interest in Woodside to over 13%. With the current deal, Shell is set to make an exit from Woodside. However, Shell still remains one of the partners of the joint venture in two LNG projects in Western Australia. It holds 16.7% and 27% interest, respectively in the North West Shelf and Browse Basin projects in the continent. 

The move will help Shell proceed with its $30-billion divestment program, which is aimed at lowering debt arising from the $47-billion acquisition of BG Group. The latest divestment is expected to enhance Shell’s cash flows and return value to shareholders. With Shell already closing more than $25 billion divestment deals, it remains on track to meet its target by 2018. The move is also in line with the company's aim to upgrade and streamline its portfolio.Shell seeks to simplify the operational structure by offloading assets. 

Headquartered in Netherlands, Shell is one of the largest integrated energy companies engaged in production, refining, distribution and marketing of oil and natural gas. The company currently carries a Zacks Rank #3 (Hold). Shares of Shell have rallied 17.5% year to date compared with 4.4% growth of its industry.

 

Some better-ranked players in the same industry are ExxonMobil Corporation XOM and Braskem S.A. BAK. Both these companies sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

ExxonMobil delivered an average positive earnings surprise of 8.81% in the trailing four quarters.

Braskem S.A. delivered an average positive earnings surprise of 47.02% in the trailing four quarters.

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