Shell's big shot for top of pile
Oil and gas giant Shell is making an aggressive bid to become the world’s biggest LNG provider.
Shell has made a $94 billion cash and share takeover bid for BG Group, which would see it take possession of the company’s QCLNG plant on Curtis Island, among many other assets.
Shell offered BG shareholders an amount about 50 per cent than the stock’s current level.
If successful, the deal will leave Shell valued at around $387 billion, and could see it selling twice the amount of product of its nearest competitors, Chevron and Exxon Mobil.
“The combination will add some 25 per cent to Shell’s proved oil and gas reserves and 20 per cent to production, each on a 2014 basis, and provide Shell with enhanced positions in competitive new oil and gas projects, particularly in Australia LNG and Brazil deep water,” the company said.
The deal would see Shell take control of BG’s Australian assets, and aim to generate pre-tax synergies of approximately $2.5 billion per annum.
“Bold, strategic moves shape our industry. BG and Shell are a great fit. This transaction fits with our strategy and our read on the industry landscape around us,” said Shell’s CEO Ben van Beurden.
“BG will accelerate Shell’s financial growth strategy, particularly in deep water and liquefied natural gas: two of Shell's growth priorities and areas where the company is already one of the industry leaders. Furthermore, the addition of BG's competitive natural gas positions makes strategic sense, ahead of the long-term growth in demand we see for this cleaner-burning fuel.
“This transaction will be a springboard for a faster rate of portfolio change, particularly in exploration and other long term plays. We will be concentrating on fewer themes, and at a larger scale, to drive profitability and balance risk, and unlock more value from the combined portfolios.
“Over time, the combination will enhance our free cash flow potential, and our capacity to undertake share buybacks, where I expect to see a substantial increase in pace.”