Deal Insight

Shell acquires BG: an in-depth view

13 April 2015

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13 April 2015

Shell acquires BG: an in-depth view

Report summary

The strategic drivers for Shell are clear and compelling: the deal establishes it as the leading player globally in both deep water and LNG. Deal economics are equally attractive: we value BG at US$84 billion (NPV10), or an Implied Long-term Oil Price of US$85/bbl.

Executive summary
Upstream assets
- Growth underpinned by Brazil deepwater and LNG
- Legacy asset base has supported investment in growth assets
- A refreshed exploration portfolio offers longer-term options
Deal analysis
- LNG trading business valuation sensitivities
- Technical resource upside
Strategic rationale
- Shell
  - Next steps - rationalisation
  - Next steps - cash flow generation
  - Next steps - further acquisitions on the cards?
- BG
- Appendix 2 - BG portfolio upsides and risks to our base modelling
  - Brazil
- Appendix 3 - Transaction details
Oil & gas pricing and assumptions

Tables and charts

This report includes 11 images and tables including:

1) WoodMac base forecast for BG production; 2) WoodMac base valuation of BG upstream portfolio
Deal analysis: Table 1
Deal analysis: Table 2

Deal analysis: Table 3
Oil & gas pricing and assumptions: Table 1
Oil & gas pricing and assumptions: Table 2
Upstream assets: Table 1
Shell / BG upstream portfolio overlap, WoodMac NPV10: 1) by country; 2) by resource theme
Shell BG combined vs. peers based on: 1) production; 2) total resource
1) Share price performance (relative) and; 2) market premium / discount to WoodMac valuation
Appendix 1 - BG portfolio base modelling and valuation