BHP Billiton Limited (ADR) (BHP): Woodside’s Acquisition Hands Shell a Difficult Decision

Meanwhile the Pulau Bukom facility in Singapore has risen to near the top of Shell’s priority list. In fact, this is the main reason behind Shell’s plans to sell its Geelong refinery in southeastern Australia. Basically, the company wants to focus only on a few ultra-large strategically important projects instead of hundreds of smaller ones.  With Singapore looking to become the physical LNG hub of the region, Shell’s increased investment at Pulau Bukom makes perfect sense give the long term rise in oil and gas demand that is forecast for Southeast Asia.

Two years ago, Shell sold a 10% stake in Woodside for $3.3 billion while clarifying that it could offload the remaining stake in the near future. Given the current price of around $35 for Woodside’s shares, which have slumped 27% since the beginning of 2010, this means that the divestment wouldn’t be as attractive an option now as then.

Like Woodside, Shell’s own stock has dropped by 8.2% in the last six months. The company’s shares have performed far worse than  Exxon Mobil Corporation (NYSE:XOM) and Chevron Corporation (NYSE:CVX), but it has a lower P/E, making it relatively cheaper while it offers a juicy yield of 4.7%.  Whatever it decides to do with Woodside, while it may be controversial, Shell is smart to double down on Singapore and solidify its position with the Arab world.

The article Woodside’s Acquisition Hands Shell a Difficult Decision originally appeared on Fool.com and is written by Peter Pham.

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