Royal Dutch Shell Plc’s worst loss in at least 16 years has further stoked concerns about the wisdom of buying BG Group Plc. For now at least, investors are still giving Chief Executive Officer Ben Van Beurden the benefit of the doubt.
Europe’s biggest oil company said it will press ahead with it’s largest-ever acquisition even as the worsening outlook for energy prices contributed to asset writedowns of almost $8 billion. Van Beurden said in July that BG Group’s assets including Australian natural gas plants and Brazilian oil fields would add to Shell’s cash flow with crude at $67 a barrel in 2016, a position he declined to repeat Thursday.
“He’s walking a thin line — a lot of investors believe the BG deal would be dilutive for Shell at these oil prices rather than accretive,” Philip Lawlor, a strategist at Smith & Williamson Investment Management LLP in London, which oversees about $24 billion of investments. “Investors are willing to give the CEO the benefit of the doubt for the time being, but how many quarters of pain are they willing to tolerate?”
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