Gbenga KOSOKO with Agency Reports
LAGOS-FOLLOWING the lead of Royal Dutch Shell shareholders one day earlier, BG Group shareholders on Thursday overwhelmingly approved Shell’s $52 billion acquisition.
When completed by mid-February, Shell will become the world’s biggest trader of liquefied natural gas (LNG), Kallanish Energy reports.
At their meeting in London, 99.53% of BG shareholders voted in favor of the merger, a day after 83% of Shell’s shareholders approved the deal, first announced last April.
Shell CEO Ben van Beurden’s wants his company to focus the Anglo-Dutch company’s operations in liquefied natural gas (LNG) and deepwater oil production moving forward even as the industry undergoes one of its worse downturns in decades.
Low oil prices will remain a challenge for the combined company in the short term, however, as crude has fallen 75% over the past 18 months to roughly $30 a barrel.
While the oil price is expected to stage a gradual recovery, Shell has said the combined group needs crude to be above $60 a barrel to break even.
“I very strongly believe in what Shell is trying to do long-term … The idea that they try to specialize in their strengths being deepwater and LNG is absolutely the right thing to do,” BG Chairman Andrew Gould told reporters.
The acquisition will boost Shell’s oil and gas production by 20%, and bring it closer to challenging the world’s top international oil company, ExxonMobil.
Combined, Shell and BG will overtake Chevron as the world’s second-biggest publicly-traded oil and gas company measured by market value.
Shell has promised to find $3.5 billion from cost savings and overlaps by 2018, from various areas including its corporate, administrative and IT operations.