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Oil Demand Is Finally Bouncing Back

Oil Demand Is Finally Bouncing Back

Oil demand is finally bouncing…

Shell Ready to Get Rid of Woodside Stake

Royal Dutch Shell has reclassified its 13.6-percent stake in Australia’s Woodside Petroleum and now considers it as “an asset for sale”, The Australian Financial Review reports, citing Shell’s chief financial officer Simon Henry, speaking to investors in a conference call.

The reclassification was prompted from the fact that Shell has had the right to appoint just one director at Woodside since it sold a stake in the Australian company in 2014, The Australian Financial Review quoted Henry as saying.

In its second-quarter results release on Thursday, Shell said: “During the second quarter 2016, management concluded that a change in Shell’s level of involvement over Woodside’s financial and operating policy decisions resulted in no longer having significant influence”.

In June 2014, Shell sold 9.5 percent of Woodside’s issued share capital in an underwritten institutional sell-down at AU$41.35 per share, ending up holding 13.6 percent in the Australian company. Woodside planned to buy back another 78.3 million shares which Shell held, worth US$2.680 billion at the time. This would have further reduced Shell’s stake to 4.5 percent, but Woodside’s shareholders voted down the buyback proposal in August 2014.

Related: Forget Inventories – Drilling Cutbacks Will Lead To Much Higher Oil Prices

This accounting reclassification for Woodside came in the quarter in which Shell saw its profits plunge 72 percent. The company reported on Thursday a second-quarter net income dropping to US$1.05 billion, down from US$3.76 billion in the second quarter of 2015. The numbers, the worst quarterly figures in 11 years, stunned analysts and missed forecasts by more than US$1 billion.

Shell attributed the lower profits to persisting low oil prices, increased depreciation with the acquisition of BG Group, weak refining market, and higher taxation. The low oil prices are still a significant challenge across the business, especially in the upstream segment, Shell’s chief executive Ben van Beurden said in the company statement.

By Tsvetana Paraskova For Oilprice.com

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