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Market keeps watching brief on Shell’s Woodside stake


by Sarah Thompson Anthony Macdonald Joyce Moullakis

With December’s silly season now underway, brokers are left with precious few trading days to launch any significant placements and block trades.

But one stake remains at the top of every firm’s watchlist: Shell’s 13.3 per cent stake in Woodside Petroleum.

Firstly, there’s a motivated seller. The oil giant’s chief financial officer Simon Henry classified the $3.4 billion stake as “available for sale” when he informed investors in August of a change in how Shell classifies its stake in the Australian oil and gas producer.

The move appeared to be driven by technical reasons because of Shell’s reduced representation on Woodside’s board. But at the same time it signalled a firmer intention to dispose of the stake, which Shell has for some time declared as a non-strategic holding.

Now Woodside’s share price is trading at $30.34, close to the 12-month high of $30.63, although still well below the $40-plus per share that Shell got in previous sell-downs in November 2010 and June 2014, both in Australian and US dollars.

But with oil prices off their lows and OPEC due to meet on Wednesday, this could be Shell’s moment to make a graceful exit – providing OPEC doesn’t disappoint the market and fail to make a deal to cut production, of course.

The stake, worth about $3.4 billion at current share prices, has long been expected among the $US30 billion of divestments Shell is targeting for 2016-18.

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