Shell insists BG merger on course

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Shell insists BG merger on course

Shell's shareholders are scheduled to vote on the acquisition on Jan 27 and BG's the next day. He said: "Bold, strategic moves shape our industry". Oil and gas producers have been hammered by the slumping oil price, amid an unprecedented supply glut. This follows a shock loss for the third quarter of the year and will contribute to a fall in full-year profits from $19bn in 2014 to between $10.7bn and $10.4bn.

The markets reacted badly to the news in early trading, with the stock price down just over 5 percent to 1,291 pence by midmorning in London.

Royal Dutch Shell plc's proposed takeover of BG Group plc will be completed "in a matter of weeks", according to Shell CEO Ben van Beurden, resulting in the reduction of a total of 10,000 workers across both companies.

The firms operating costs fell by $4bn (close to 10%) in 2015 - costs are expected to fall by a further $3bn during 2016. The low crude oil and gas prices affected the energy giant's financial position previous year.

"A substantial number of staff in the operations of Shell and Chevron in Nigeria will be swept by this gale of sack", an industry source once told New Telegraph, adding that Shell and Chevron were "courageous enough to announce the number of staff to be affected, but the truth is that all the global oil companies (IOCs) are toeing the line of downsizing and they have all begun this with the termination of contracts with some of their contract staff". It will publish full year results on February 4 and maintained its 2016-18 asset sales projection of $30 billion, provided its acquisition of BG goes through, and its 2016 dividend payment forecast of at least $1.88 per share. The company is planning to merge with British counterpart BG Group and, combined, spending of $33 billion for the year marks a 45 percent reduction from its peak.

GETTYBen van Beurden and BG Group chairman Andrew Gould together in London last April
GETTYBen van Beurden and BG Group chairman Andrew Gould together in London last April

If approved, the merger would give Shell a stake in highly-prized oil fields offshore Brazil and bolster its already sizable position in the growing liquefied natural-gas market.

Despite concern among some Shell investors that the group is paying too much for BG after the fall in oil, the company is expected to win shareholder approval for its cash-and-shares bid. It plans another $30bn of asset sales in the next two years, following the completion of the merger.

For the fourth quarter, Shell's income attributable to shareholders is expected to be in the region of $0.6 - $1.0 billion and earnings on a current cost of supplies or CCS basis excluding certain items to be in the region of $1.6 - $1.9 billion. Downstream - refining and processing - will be slightly lower than anticipated at $1.4-$1.6 billion versus Deutsche's estimate of $1.7 billion and consensus of $2 billion.

The slump in 2015 earnings comes after Shell said fourth quarter earnings are expected to almost halve to between 1.6 billion U.S. dollars (£1.1 billion) and 1.9 billion United States dollars (£1.3 billion).

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