Shell completes acquisition of BG Group
Royal Dutch Shell has closed a mega-takeover of British BG Group for a total consideration of US$53 billion.
The deal is expected to accelerate Shell's growth strategy in global LNG and deep water. It will add 25% to Shell’s proved oil and gas reserves and 20% to production. According to shell the combination has potential to generate pre-tax synergies of approximately US$2.5 billion per annum.
Shell believes that, by around 2020, the combined group will have:
- two strategic growth businesses – deep water and integrated gas – that could potentially each generate $15-$20 billion of cash flow from operations per annum;
- upstream and downstream engines that could potentially generate a further combined $15-$20 billion of cash flow from operations per annum in total; and
- long-term positions which could potentially add around a further $10 billion of cash flow from operations per annum.
Shell, the largest oil company in Europe, has seen its profits decreased by 80 percent in 2015. Additionally the company's earnings have deceased to $3.8 billion from $19 billion in 2014. Van Beurden recently commented in a statement:
“We are making substantial changes in the company, reorganizing our upstream, and reducing costs and capital investment, as we refocus Shell, and respond to lower oil prices.”
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