Shell expects $47 billion BG takeover to go through within weeks

20 Jan, 2016 12:27 pm

LONDON – Royal Dutch Shell’s acquisition target BG Group beat its 2015 production target, it said on Wednesday, days before shareholder meetings to vote on a $47 billion deal that is expected to go through in coming weeks.

BG, which will report full-year results on Feb. 5, said it expected 2015 production volumes to have hit 704,000 barrels of oil equivalent per day (boepd), above its guidance of 680-700,000 boed, due to new fields that have come on stream in Australia, Brazil and Norway.

Shell is banking on access to new resource-rich areas, especially in Brazil, to make the BG acquisition worthwhile.

“The completion of the BG transaction, which we are expecting in a matter of weeks, will mark the start of a new chapter in Shell, to rejuvenate the company, and improve shareholder returns,” Shell Chief Executive Ben van Beurden said in a statement.

Shell shareholders will vote on the deal on Jan. 27, followed by a BG shareholder vote on Jan. 28. The deal will result in the loss of 10,000 staff and contractor jobs in 2015-16, they said.

Many of Shell and BG’s large shareholders have voiced support for the deal but a slump in oil prices below $30 a barrel has raised concern Shell may be overpaying for the smaller rival.

The fall in oil prices meant BG booked a $700 million impairment charge in the fourth quarter related to fields in the North Sea and Tunisia, it said on Wednesday.

Shell said it expected full-year core earnings of $10.4-10.7 billion, slightly below a company- provided consensus of $10.8 billion.

It maintained its 2016 capital investment target of $33 billion and its 2016-18 asset sales projection of $30 billion, provided its acquisition of BG goes through. Shell ‘A’ shares were down 3.4 percent early on Wednesday and BG shares opened 2 percent lower. -Reuters

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