Fair price for BG Group
Published by Callum O'Reilly,
Senior Editor
LNG Industry,
Rystad Energy believes that Royal Dutch Shell’s US$69.7 billion offer to take over BG Group, which implies a 50% premium to pre-deal stock prices, represents a fair price at US$100/bbl oil prices.
The new enterprise value of BG is now US$70 billion, which is lower than the fundamental valuation in Rystad Energy’s upstream databse UCube, which set a price of US$77 billion for BG Group’s upstream activities (assuming US$105/bbl Brent in 2020 and 10% required return).
Rystad Energy’s valuation indicates that half of the value is driven by Brazil pre-salt. BG Group has been a close partner with Petrobras in this area since it discovered the Lula field in 2006. The value of the Brazil portfolio is 50% driven by projects not yet sanctioned. Coal seam LNG projects in Australia represent US$20 billion of the valuation.
Edited from press release by Callum O'Reilly
Read the article online at: https://www.lngindustry.com/liquid-natural-gas/09042015/bg-group-good-value-for-shell-567/
You might also like
IEEFA: Tidal wave of new LNG supply to flood market amid demand uncertainty
Sluggish demand growth for LNG, combined with a record increase in global export capacity through 2028, will likely thrust markets into an extended period of oversupply, according to the latest Global LNG Outlook from the Institute for Energy Economics and Financial Analysis.