Royal Dutch Shell buys U.K. gas company in US$69.7B deal
British gas producer BG Group is a big player in Canada's oil sands and the main partner building a liquefied natural gas terminal in B.C.
THE HAGUE, Netherlands—Royal Dutch Shell has agreed to buy British gas producer BG Group for the equivalent of US$69.7 billion in cash and stock, a move that could strengthen Shell’s position in the global energy sector.
Shell said the takeover will add 25 per cent to its proved oil and gas reserves and 20 per cent to production compared with 2014, and boost its position in new oil and gas projects in Australia and Brazil.
The company is also a major player in Canada’s oil sands and the main partner in LNG Canada, which has been working on terminal to export liquefied natural gas from Kitimat, B.C., but the companies’ joint statement focused on other markets.
The boards of both companies are recommending that shareholders approve the deal.
They say a combined company would be more competitive and reduce annual expenses by about US$2.5 billion by 2018, including $1 billion from operating costs and $1.5 billion from exploration spending.
“Bold, strategic moves shape our industry,” Shell CEO Ben van Beurden said. “BG and Shell are a great fit. This transaction fits with our strategy and our read on the industry landscape around us.”
The terms of the offer would result in BG shareholders owning about 19 per cent of the new combined business.
Van Beurden said BG was a good fit for Shell looking to the future.
“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,” he said.
BG’s CEO Helge Lund said his company also would benefit from the takeover.
“BG’s deep water positions and strengths in exploration, liquefaction, and LNG shipping and marketing will combine well with Shell’s scale, development expertise and financial strength,” he said.