In what is already considered the biggest business in the oil sector since 1998, Royal Dutch Shell is preparing to reach a market value higher than that of BP and Chevron rivals and increase by 28% its oil and natural gas reserves . The group announced on Wednesday the purchase of BG Group for about 47 billion pounds (about EUR 64 billion), a transaction involving cash and shares.
This may be the beginning of a new movement of consolidation in the sector, taking into account the challenges that companies have faced in recent months with the decline in oil prices, analysts say. “We may watch other acquisitions in the coming weeks or months,” he told Reuters Saxo Bank broker, Andrea Tueni. “In general, the wave of mergers and acquisitions that has spread across multiple sectors is positive for the market,” he added.
The shares of energy companies, affected by lower profits and cost reduction plans that forced redundancies and cancellation of projects for high reacted to the business and the titles of the BG Group rose as much 37%. Already Shell reacted in opposite sign, given that oil is proposed to pay a premium of 50% over the closing price of BG Group last Thursday.
In Lisbon, Galp was no exception to the good sector behavior. Near the market closing time, the Portuguese oil company securities rose 5.4% to 11.51 euros, but came to value more than 10% and to be worth 12.05 euros in the morning.
The deal will be the largest ever Shell, tells Reuters. To date, the largest transaction of the company led by Ben van Beurden had been buying from a position of 22% that has not held in Shell Canada for seven billion (€ 6.4 billion).
BG Group was part of the state-owned British Gas, which was privatized by Margaret Thatcher in the 80s Today is one of the largest producers of liquefied natural gas (LNG its acronym in English) and with its acquisition, Shell will become the market leader, says Bloomberg.
The agency also points out that the Anglo-Dutch company pioneered the gas liquefaction process for transport on ships and has, as the US rival Chevron, bet this segment with the conviction that the demand for LNG will grow in the coming years, especially among emerging economies that will look cleaner alternative energy sources such as coal.
With the purchase of the BG Group, Shell also ensures presence in the Brazilian pre-salt projects (BG Group has 25% of the consortium for BM-S Block 11, in the Santos basin, the same where Galp holds a position 10%), consolidates the position in gas exploration projects in Australia and is emerging as a strong player at a time when the United States should start exporting LNG.
Shell promised to shareholders in the coming years will cut costs by 2.5 billion (EUR 2.2 billion), fit at least 30 billion (€ 27.5 billion ) from the sale of assets and put in brand a share buyback program between 2017 and 2020 in the amount of 25 billion dollars (22.9 billion euros).
The last two deals of this magnitude occurred in 1998, the year he gave merger of Exxon and Mobil, valued at 73 billion dollars, and the purchase of Amoco by BP for 48 2 billion.
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