Concern by investors that Shell will not complete its planned acquisition of BG Group has been exaggerated, according to the oil major’s chief executive.
According to reports in the Financial Time, Ben Van Beurden told the paper that the two companies’ share prices had been “knocked about” by recent upheaval in stock markets.
Van Beurden said both companies’ valuations were driven by “risk aversion at the moment, rather than careful considered pricing.”
The head of Shell said the company would be maintaining its commitments to its dividend.
He also said that over time there was likely to be a “floor under oil prices” at $70 per barrel, but he could not specify when the market would make it back to that level.
Van Beurden said: “It doesn’t help me making decisions today. Today’s decisions are driven by today’s oil price.”
He was “categoric” that the company had “no intention to walk away from this deal,” he said.
Shell announced its planned takeover of BG in April but in order to do so needs to secure regulators’ approval in the EU, Brazil, China and Australia before also wining the backing of both of the companies’ shareholders.
Van Beurden said the takeover plans still offered both companies a “strategic transformation” for Shell and would give it a leading position in both deepwater development and liquefied natural gas (LNG).
Earlier this month the chief executive said the £47billion takeover of BG Group is undervalued in the city.
He also insisted the economics of the deal make perfect sense, even at the current low oil prices.
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