Shell forecasts higher savings from BG Group takeover
Energy giant Royal Dutch Shell on Tuesday increased by $1.0 billion the amount it expects to make in cost savings from its mega takeover of smaller British rival BG Group.
The Anglo-Dutch group said it anticipates savings of $4.5 billion (4.0 billion euros) in two years' time.
"We are announcing an increase in expected deal-related synergies, from the $3.5 billion set out in the prospectus, to $4.5 billion on a pre-tax basis in 2018, an increase of some 30 percent," Shell said in a statement.
The company recently completed a £47-billion ($68-billion, 60-billion-euro) takeover of BG Group, in a deal aimed at strengthening Shell's position in the liquefied natural gas (LNG) market.
Owing to the takeover as well as low oil prices, Shell is cutting at least 12,500 jobs over two years to the end of 2016.
"By capping our capital spending in the period to 2020, investing in compelling projects, driving down costs and selling non-core positions, we can reshape Shell into a more focussed and more resilient company, with better returns and growing free cash flow per share," Shell chief executive Ben van Beurden said in Tuesday's statement as it prepared for a presentation day with analysts.
Shell announced an 89-percent drop in net profit for the first quarter of 2016, blaming the slump on low oil prices.
The global oil market had nosedived from above $100 in mid-2014 to 13-year lows of around $27 in February, plagued by a stubborn supply glut.
But prices have since rebounded to trade at around $50 a barrel on signs that the market is rebalancing.
The slump in prices has caused energy groups worldwide to cut spending, slash jobs and sell assets during the past year.
© 2016 AFP