(Adds analysis comment, share price moves)
MELBOURNE, July 31 Woodside Petroleum Ltd's
planned $2.68 billion share buyback from Royal Dutch
Shell is on the brink of failing, based on a count of
votes mailed in ahead of a shareholder meeting on Friday.
Woodside said on Thursday about 71.3 percent of votes cast
so far were in favour, with the rest against. It needs support
from 75 percent of votes cast to go ahead with the buyback,
which would cut Shell's stake in the company to below 5 percent.
"If it gets knocked back, the question will have to be what
happens next, and in our view it's likely the board will move to
implement an equal access buy-back," said Nik Burns, executive
director & lead energy analyst at UBS.
Shell is selling the bulk of its 23.1 percent stake in
Woodside. As part of the deal Woodside aimed to buy back and
cancel half the shares that Shell was selling to smooth the
impact of the sell-down. Shell has already sold the other half
Australia's top petroleum company will be hoping
shareholders who attend Friday's meeting will tip the vote in
favour of the buyback.
Shares in Woodside lost 1.4 percent to trade at A$42.28,
recovering from a session low of A$41.96 by 0143 GMT, compared
with a broader market rise of 0.3 percent.
Some Australian fund managers have opposed the move because
it gives Shell access to tax credits that they believe all
shareholders should have access to on an equal basis.
Woodside has tried to persuade investors they will all
benefit from the buyback as it will boost earnings per share and
dividends per share for everyone, while removing an overhang
that has long weighed on its share price.
If the board moves to post an equal access buyback, Burns
said he expects Shell to retain more than a 10 percent stake in
Woodside, and the overhang Woodside was trying to remove through
the process would still exist.
The reduction in Shell's stake marks a milestone in a long
retreat from a company that it had tried to take over in 2001.
That deal was ultimately blocked by the Australian government
after Woodside argued that Shell may focus on offshore
developments at the expense of Australian projects.
Like other oil majors, Shell is under pressure from
investors to cut soaring costs and increase profit distribution
via dividends and share buy-backs. Under Chief Executive Ben van
Beurden, the company has sold or put on the block around $12
billion of assets in Australia, Europe, Nigeria and North
($1 = 1.0726 Australian Dollars)
(Reporting by Sonali Paul, additional reporting by Thuy Ong in
SYDNEY; Editing by Richard Pullin)