Shell’s acquisition of BG: the secrets of petroleum giants

A UK natural gas supergiant has been born. According to Bloomberg, Royal Dutch Shell agreed to acquire British Gas for £ 47b cash and around US$ 70b in stock. Large energy-related acquisitions have been rare this year. This is also the largest acquisition for Shell since merging with Royal Dutch in 2005.

British Gas is an oil and gas legend. It was at the forefront of the industry for the last decade, and it beat out competition in various aspects including long-term growth, increased reserves, expected output, shareholder return rates and expected cash flow. This is very uncommon in the 21st century, with oil giants exhibiting very slow growth due to their size, fluctuating oil prices, and, most importantly, the declining output of oil fields. These obstacles have caused oil giants to focus on maintaining steady output, reserves, and cash flow so as to deliver promised returns. Reduced output is also the reason why massive investment has been made into exploring new sources of oil.

Click to read Energy Outlook Magazine's article Shell’s Acquisition of BG: The Secrets of Petroleum Giants. (Chinese Only)

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