Shell to sell part of its Woodside Petroleum stake for $1.7 bn

Company to use proceeds to pay off debt

Royal Dutch Shell is selling part of its stake in Australia's largest independent oil and gas company, Woodside Petroleum Ltd, to equity investors for about $1.7 billion.

Shell, which has been slowly divesting its Woodside holding, said on Monday its Shell Energy Holdings Australia Limited (SEHAL) unit had struck a deal with two investment banks over the sale of 71.6 million Woodside shares for 31.10 Australian dollars ($23.79) apiece.

The oil major said that represented 64 per cent of its interest in Woodside and 8.5 per cent of the issued capital in Woodside.

The announcement came after the close of trade on the Australian bourse, where Woodside ended one per cent lower at 32.24 Australian dollars a share.

Upon completion of the sale, SEHAL will own a 4.8 per cent interest in Woodside.

Shell has so far sold or agreed to sell over $26 billion as part of a three-year, $30-billion asset sales programme launched following the acquisition of BG Group in 2015.

"Proceeds from the sale will contribute to reducing our net debt," Shell Chief Financial Officer Jessica Uhl said in a statement.

Equity capital markets teams from a number of international banks had been asked earlier on Monday to submit bids and lock in cornerstone investors, a banking source requesting anonymity told Reuters.

Shell said it had agreed not to dispose of any of its remaining shares in Woodside for a minimum of 90 days from completion of the latest sale.

Even before Shell set out to sell assets, it was distancing itself from Woodside.

In November 2010, it sold 10 per cent of the issued capital of Woodside, taking its stake to 24.27 per cent. This was further diluted to 23.08 per cent after Shell decided not to participate in Woodside's dividend re-investment programme.

In June 2014, Shell sold another 9.5 per cent of Woodside's issued shares, dropping its interest to 13.28 per cent after again opting out of the dividend reinvestment scheme.

Australia blocked a takeover bid by Shell for Woodside in 2001 on national interest grounds.

Shell will remain joint venture partner in two liquefied natural gas projects in Australia, according to Woodside.

"Woodside will maintain a close working relationship with Shell - as a joint venture partner and customer of Shell technology - and we recognise that Shell will always be part of our history," Woodside Chief Executive Peter Coleman said in a statement.