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Shell surprises with $3.3 billion Woodside stake selldown

Shell surprises with $3.3 billion Woodside stake selldown

Sydney: Oil company Royal Dutch Shell Plc unveiled plans on Monday to sell about a third of its stake in Woodside Petroleum for $3.3 billion, effectively putting Australia’s largest oil and gas firm in play.

Shell said it would hang onto its remaining 24.27% Woodside stake for at least a year - but it could sell earlier under certain circumstances such as a full takeover of Woodside.

Woodside, which had a market value of A$35.9 billion at Monday’s close, operates the massive North West Shelf project in Western Australia which accounts for about 40% of the nation’s entire oil and gas production.

Shell said it was selling 10% of Woodside at A$42.23 a share in a sale underwritten by investment bank UBS.

UBS would now expected to offer the stock to institutions, analysts said, adding the move was a surprise because the stake could have been offered in one piece to a potential bidder.

“Any potential bidder is going to have to at least stump up A$50-plus to bid for Woodside," said David Lennox, resources analyst at Fat Prophet.

Woodside closed flat ahead of the news at A$45.86.

The sale is part of a global effort to improve capital efficiency and simplify the group, Shell said.

Investment banks said last week Woodside was being eyed as a potential takeover target with its long-serving chief executive, Don Voelte, due to step down in the second half of 2011, potentially leaving the company exposed to predators.

Woodside shares rose last week on speculation global miner BHP Billiton may take a look if its $39 billion bid for Canada’s Potash Corp collapsed.

The six equal partners in the North West Shelf joint-venture are Woodside, BHP Billiton, Chevron, BP Plc, Shell and Japan Australia LNG (MiMi) Pty Ltd, which is a venture of Mitsubishi Corp and Mitsui and Co.

Shell is also a partner in the rival Gorgon LNG project operated by Chevron Corp. Woodside was not immediately available to comment, while Shell declined to provide additional comment.

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