Our analysts thoughts on the deal.. Ultimately the deal has good optionality for Shell
Positives
Raises their production growth capability
Drives more thoughts about capital efficiency – interesting to me that from 2017 onwards They will consider buying back stock to offset the share issuance
Commitment to dividend 2015-16 and mix/match with buyback afterwards
Got the balance sheet to do it
Double the size of anyone else in LNG now – preferring to expand here and in conventional rather than double up on unconventional
Name checked the Brazilian assets at length
Problems/issues? –
Of course will look silly if oil price falls etc. Talked about stress testing the deal and believe buying at an attractive SOTP discount
Headline synergy levels not a huge % of acquisition price
Risk of a counterbid? If XOM are interested in BG then this has to be the time
Helger Lund newish BG CEO on the call – surely he is moving on with a big pay-off
Net net –
Shell shareholder – the deal washes through fine and the closer to that 2000p support level where the shares get more interesting
BG shareholder – hold on, Shell shares getting nearer big support for equity element and you never know re a counterbid
Broader industry – big assets versus market cap the key. Tullow? Apache, Anadarko in the US?