Rumors In The Air Of Shell-BP Merger - Guardian/Mail & Guardian

[hatrack]

Shell was at the centre of buyout moves and speculation on Monday after it unveiled plans to spend C$7,7-billion (£3,7-billion) simplifying its North American business. This was seen by some as a step towards a £230-billion mega-merger with BP. The Anglo-Dutch oil group has also had its name linked with Premier Oil, although most industry experts rule out Shell being the unnamed company now in take­over talks with the exploration firm.

Shell said on Monday it would buy the 22% it did not own in Shell Canada, which is independently managed. It is quoted on the Toronto stock exchange and is involved with oil-sands production in Alberta. “We think the interests of the Shell Canada minority shareholders are well served by accepting the cash offer we are proposing,’’ said Jeroen van der Veer, Shell’s chief executive.

A Shell spokesperson said the deal would speed up decision-making and integrate the business into the whole Shell group. “It naturally follows from the successful unification of the wider Royal Dutch Shell company in 2005 to a group with one chief executive and one headquarters,’’ she added.

Shell must still secure the support of its subsidiary’s board and more than half of the outstanding shares being tendered, but few industry experts anticipate opposition. Equity analysts said the move was “good housekeeping’’ and might be one that could more easily be achieved by Shell ahead of any possible tie-up with BP. Earlier this year Britain’s biggest company acknowledged that it had been looking at the idea of a merger as part of “scenario planning’’.

EDIT

http://www.mg.co.za/articlePage.aspx?articleid=287960&area=/insight/insight__economy__business/

There is no evidence that talks are taking place. There is no suggestion that executives on either side are agitating for it to happen. Yet the idea that BP and Shell could merge to create the world's largest company refuses to go away. Oppenheimer & Co, a Wall Street investment house with a reputation for being close to the pulse of the oil industry, has published a detailed analysis of a deal it thinks could be "an intelligent, strategic response to a shifting global landscape".

The oil industry invented mergers and acquisitions, so you never say never, but desperate, rather than intelligent, is the first word to describe a BP-Shell mega-merger. It is hard to think of two large organisations in the same industry with such wildly different cultures. Years of in-fighting among executives would be virtually guaranteed.

Government regulators, reckons Oppenheimer, would "easily" give approval, an heroic assumption. It is more likely that regulators would demand gigantic disposals from a company that would be producing 75% more oil and gas than ExxonMobil, the industry titan. By the end of the process, it is anybody's guess how much would remain of the supposed $5bn of annual cost savings.

For all that, Oppenheimer is not given to wild flights of fancy for no reason. It has put its finger on why BP and Shell may just be desperate enough. For BP, the next few years will bring official scrutiny of the corroded pipes in Alaska, the Texas City refinery explosion and the delays in restoring the Thunder Horse platform in the Gulf of Mexico. Not much excitement there. For Shell, there is nothing so specific, just the prospect of operational under-performance against the likes of Exxon and a realisation that the best takeover opportunities were missed in the 1990s.

EDIT

http://business.guardian.co.uk/story/0,,1929789,00.html

[whistle]

1. Shell + BP = how much total falsified and exaggerated claims

...of so-called oil reserves between them now? Maybe close to half of all known reserves?

<snip>
May 15, 2006
Why You Should Worry About Big Oil
Beyond the fat profits, the giants are surprisingly vulnerable worldwide. That's bad news for business -- and consumers
<...>

In the long run, the big oil companies that can't find a way to invest profitably in their industry could find themselves vulnerable. "Companies can't go on returning cash to shareholders. Otherwise they might as well give the assets to someone else," says Mark Bentley, head of global energy investment banking at HSBC (HBC ). Bentley says hedge funds and investors are closely scrutinizing oil company performance. Consumers take note: Big Oil has a future. But despite that gusher of profits, it's not an easy one.
<more>

http://www.businessweek.com/magazine/content/06_20/b3984001.htm

[Sven77]

2. the queens

Beatrix and Elizabeth 2nd own most of the oil