It is being reported that Royal Dutch Shell is in discussions with BG Group regarding a possible USD 70 billion merger between the two oil and gas companies. Shell has taken a step to boost its deepwater and LNG asset portfolio during the current low equity price environment by taking over BG Group.
Volatile oil prices has depressed the equity values of companies in the oil and gas sector, causing a recent flurry of merger and acquisition moves but this is the largest major oil and gas producer merger since the early 2000s. BG has an attractive portfolio of deepwater and LNG assets, mainly in Brazil and Western Australia, which Shell plans to accelerate the development. This would add 25 percent to Shell’s proven oil and gas reserves, and 20 percent to its producing assets. Shell believes that these additions to its portfolio will boost its long-term production strategy.