Shell Poised to Become World’s Largest LNG Producer
THE HAGUE, Netherlands — Royal Dutch Shell plc struck a deal to acquire BG Group for $70 billion. If completed, The Hague-based oil giant will become the world's largest producer of liquefied natural gas (LNG).
According to Dealogic, the Shell-BG deal is the biggest in the oil sector since Exxon acquired Mobil in 1998.
The $70-billion price tag represents a 50-percent premium to British-based BG's closing price on Tuesday. BG is known for its natural gas holdings in Australia, as well as its oil fields in Brazil.
“We have been scanning quite a few opportunities, with BG always being at the top of the list of the prospects to combine with,” Shell CEO Ben Van Beurden said during a conference call Wednesday morning. “We have two very strong portfolios combining globally in deep water and integrated gas.”
Not only will the deal make Shell an LNG powerhouse, but the transaction will also add 25 percent to its oil and gas reserves and 20 percent to its production capabilities.
Shell expects to see synergies totaling approximately $2.5 billion from the deal.
The pending transaction has experts predicting more mergers and acquisitions will take place among oil majors. Exxon Mobil Corp. has been named as one company seeking to make a deal.
Oil giants are not the only ones announcing deals lately. Many large convenience store industry mergers were announced in 2014. In addition, suppliers are now in focus following the H.J. Heinz Co.-Kraft Foods Group merger announced last month.