BG Group announced its Q1 2015 results and provided an update on operations, including the recommended cash and share offer for BG Group by Royal Dutch Shell.
The business and operational highlights concerning Egypt stated the following: In March, BG Group announced the signing of a tie-in agreement with BP Egypt and RWE DEA to utilise the WDDM offshore infrastructure to process gas from their field which is expected to start producing in mid-2017. A separate agreement was also signed with BP Egypt and RWE DEA whereby the right of use of the Rosetta onshore facilities will effectively be transferred to them from mid-2016 to process their gas from 2018. BG Group will continue to hold rights to the Rosetta concession and may process future gas through the WDDM facilities. At the end of the first quarter, the amount owed by the Egyptian government was $1.0 billion, with $0.7 billion overdue. Discussions continue with the Egyptian government regarding potential future gas development programmes, subject to the negotiation of a higher domestic gas price and resolution of the outstanding receivables.
On the Shell offer, BG Group’s Chief Executive, Helge Lund commented: “Following the end of the quarter, the company announced an offer from Shell, which the Board has recommended to shareholders. The attractive offer is now subject to regulatory and shareholder approvals and completion is expected in early 2016. Until then, BG Group will operate independently and our teams remain focused on delivering our plans safely and efficiently.”
Mr. Lund, who joined BG Group plc as Chief Executive and an Executive Director in February 2015, added: “I view this as an attractive deal for the shareholders of BG. It makes very strong sense, industrially and strategically, to combine these two companies. It will add around 20% to Shell’s production and will increase their reserves by around 25%, based on 2014 figures. I believe the combination of two very competent organizations with complementary skills will further enhance the competitiveness of the new group. The value offered by Shell is also attractive as it accelerates the delivery of value from our strategy, while removing many of the potential risks. These are the core reasons why I, together with the Board, have unanimously recommended the offer from Shell.”
(BG Group Press Release)