Woodside takes early drop

Woodside Petroleum shares dropped 3.7% as the market opened in Australia, after the company confirmed on Wednesday morning that Shell completed a sell-down.

Shares are trading at A$41.24 ($38.5) per share during morning trade.

The Anglo-Dutch major made an announcement on Tuesday that it was shedding a large portion of its interest in the Australian player.

Analysts predicted this morning that Woodside shares would fall off during morning trade, with Shell's sale price at a discount to its previous closing price.

Shell now holds 13.6% of Woodside’s issued capital, but that number could yet fall with a planned buy-back.

“Woodside intends to buy-back 78.3 million shares currently held by Shell for US$2.6 billion in accordance with the buy-back agreement,” the company said in a statement.

“The selective buy-back is subject to approval by Woodside shareholders at an extraordinary general meeting that is scheduled to take place in August.”

Once the potential buy-back goes through, Shell’s holding would be reduced to 4.5%.

Woodside chief executive Peter Coleman confirmed on Tuesday that the buy-back would be “accretive to earnings per share by approximately 6%”.

He told a teleconference that the company plans to cancel the shares it is set to buy back.

Coleman added that we did not believe shareholders would vote against the buy-back when asked by analysts.

“Such a negative thought,” he said. “We think this is a seriously this is a compelling offer to our shareholders.

“Look in the very unfortunate event that it did get voted down and I just can't see the circumstances in which it would but I'll go with your question, we'd have a look at our capital management plans then.

“But I'd say that it would take some time for us to reconsider what we would do.”

Chairman Michael Chaney confirmed the Shell-appointed directors on the Woodside board would be kept on as independent directors.

“You know both of them have very deep technical experience, both of them have run the North West Shelf Project in their working lives,” he said.

“They bring a wealth of international oil and gas experience, which is not easy to find, so we expect to maintain their membership.”

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