50% premium on BG, a fair price at 100 USD/bbl oil prices

April 9, 2015

UPDATE April 10

European super major Royal Dutch Shell offers 69.7 BUSD to take over rival BG Group to strengthen its footprint on global LNG and integrated gas. This implies a 50% premium to pre-deal stock prices. The new Enterprise Value of BG is now at 70 BUSD, still lower than the fundamental valuation in Rystad Energy’s upstream database UCube, which has set a price tag at 77 BUSD for the group’s upstream activities, assuming 105 USD/bbl Brent in 2020 and 10% required return. The full Transaction Value is 82 BUSD including 12 BUSD net debt and about 10 BUSD of midstream assets. Rystad Energy’s valuation indicates half of the value is driven by Brazil pre-salt where BG has been a close partner with Petrobras since BG discovered the supergiant Lula field in 2006. The value of the Brazil portfolio is 50% driven by projects not yet developed. 20 BUSD of the valuation comes from Australia coal seam LNG projects, where more than 2/3 of the value is from fields and plants not yet fully developed.


 

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Rystad Energy is an independent oil and gas consulting services and business intelligence data firm offering global databases, strategy consulting and research products.

Rystad Energy’s headquarters are located in Oslo, Norway, with additional research teams in India. Further presence has been established in the UK (London), USA (New York & Houston), Russia (Moscow), Africa as well as South East Asia.