The M&A wave from the Shell-BG deal may not be the one you expect
BY Geoffrey Smith: 8 April 2015
Consolidation in the U.S. shale sector is being held up by desperate hopes for a turnaround in prices, and the continued flow of free money from the Fed.
When a commodity price collapses, it’s only natural to see a shakeout among the companies that produce it. The weak go the wall and the strong salvage from the wreckage what they think will make them stronger.
Only, oil often doesn’t play by those rules, particularly outside the U.S.. Many of the world’s biggest companies are either entirely state-owned, or are sufficiently under the control of their respective governments as to thwart the process of natural selection. That’s why most of Europe’s big oil and gas national champions — France’s Total SA STOHF 0.49% , Eni SpA EIPAF 1.57% and Spain’s Repsol SA REPYY -0.84% — have all been left cold by the news of Royal Dutch Shell’s RDSAF $70 billion merger with BG Group BRGYY 26.72% .
The TRUTH will set you FREE.
By John Donovan
