Royal Dutch Shell Could Eclipse Exxon Mobil Corporation As Largest Producer: Credit Suisse
By: MICHEAL KAUFMAN: Published: Apr 10, 2015 at 6:22 am EST
In a report published on Thursday, Credit Suisse commented on the aftermath of Royal Dutch Shell plc’s (ADR) (NYSE:RDS.A) announcement to acquire BG Group Plc (ADR) (OTCMKTS:BRGYY). The sell-side research firm deliberated that the transaction makes sound strategic sense and moves Shell down the cost curve. The firm reiterated an Outperform rating on the stock.
Although the announcement comes with a rich valuation, Credit Suisse does not expect any counter-bid unless someone uses Shell’s internal planning assumptions. The new company might eclipse Exxon Mobil Corporation (NYSE:XOM) as the largest publicly traded producer by 2018, and will be a less capital-intensive version “of its former self” with greater scale and scope around key focus areas.
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Royal Dutch Shell’s swoop on BG Group will face a series of hurdles including competition fears and questions over the ownership of some of its newly acquired assets.
