Silver Ridge Resources says the Royal Dutch Shell, BG deal could be the first of many in an oil & gas sector coming to terms with a new supply reality.
According to Silver Ridge Resources, Anglo-Dutch oil major, Royal Dutch Shell’s bid for its smaller UK-headquartered rival BG is likely the first of what could be a slew of consolidation deals in an oil & gas sector coming to terms with changing supply dynamics in the world’s energy market.
According to China-based investment house, Silver Ridge Resources, Royal Dutch Shell’s $90 billion bid will create a world leader in liquefied natural gas second only to Russian state-owned giant, Gazprom and Iran’s imaginatively-named National Iranian Oil Company.
Asked why Shell wanted to buy BG, Vivian Ericsson, chief commodities and resources research at Silver Ridge Resources said, “In a nutshell, Royal Dutch Shell thinks –quite rightly – that it’s cheaper and simpler to just buy BG rather than go out and spend billions on exploration to support future supply. Compared to other big oil players, Shell has encountered problems replacing the reserves it’s already pumped so the BG deal makes a great deal of sense.”
She has told clients to expect more mergers as the oil price environment looks more like that of the 1980s when many of the large mergers that created modern-day giants like ExxonMobil took place. The firm sounded a note of caution warning that ‘mega-mergers’ on the scale of the Royal Dutch Shell/BG deal typically occurred just before a crash.
“We’re not suggesting that this deal is too rich; Royal Dutch Shell is simply taking advantage of depressed oil prices to grow its reserves inorganically – but we won’t be going out shopping for small or mid-cap oil companies. What we would advise, however, is that those holding stock in companies like BP or Chesapeake should hold onto them,” concluded Ericsson.
About Silver Ridge Resources:
Founded in 2005, Silver Ridge Resources is an independent, full-service brokerage, investment planning and management concern committed to delivering innovative capital appreciation and preservation solutions to individuals and families with a high net worth. We place the welfare of our clients and their families first and we pride ourselves on having become the first port of call for their financial affairs. We consistently exceed our clients’ expectations by going the extra mile in terms of attention to detail, delivery of service and, most importantly, returns on investment.
From our headquarters in Shanghai, China and offices around the Asia Pacific region, we currently oversee the deployment of over $4.5 billion of assets on behalf of clients both in Asia and around the world.
Contact Silver Ridge Resources:
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8675586243512
info@silverridgeresources.com
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