Royal Dutch Shell announces increased synergies from BG purchase

Royal Dutch Shell will accelerate the implementation of measures to deal with a prolonged downturn in oil prices once the acquisition of BG Group is complete, the company told investors in a strategy update.

The integrated oil and gas exploration and production company would capitalise on its competitive advantage in a low oil price environment, with the purchase of BG rejuvenating Shell’s upstream assets by adding deep water and integrated gas positions.

“Shell is becoming a company that is more focused on its core strengths, a company that is more resilient and competitive at all points in the oil price cycle and that has a more predictable project development pipeline. We’ll grow to simplify.”

BG assets offered attractive returns and cash-flow alongside growth potential. They were also industries where Shell has significant capabilities and technologies, company boss Ben van Beurden said in a statement.

Royal Dutch Shell reiterated it was on track to cut costs and spending by $11bn in 2015.

The outfit also announced it had identified another $1bn in pre-tax synergies to $3.5bn.

"Asset sales and hard choices on capital spending, such as the recent announcements to cease exploration in Alaska and the development of Carmon Creek heavy oil in Canada, all underline the changes that are underway."