Shell's announcement that it will be cutting more than 10,000 jobs has received mixed reactions from investors, while the oil giant has revealed it will save $15bn (£10bn, €13.7bn) in preparation to take over BG Group. While Aberdeen Asset Management has backed the merger, others are worried about the timing of the tie-up.
Oil benchmark Brent Crude has been flirting with levels lower than $36 and fell below West Texas Intermediate for the first time since 2010. David Cumming, the head of equities at Standard Life Investments, said the merger "doesn't make financial sense" because of the current oil prices and disapproved of the deal. However, shareholders gave a slight nod on 23 December, when both companies were among the biggest risers on the FTSE 100.
After a series of approvals from antitrust and regulatory bodies across the world, the giant oil merger is still awaiting official shareholder approval. On 22 December, Shell announced a fresh raft of restructuring initiatives to prepare for the merger.
Investment spending has been cut by $8bn in 2015 compared to 2014, a decrease of 20%. Shell announced an additional $7bn cost cuts. The Royal Dutch oil firm has made severe cuts in capital expenditure and other divisions.
"The combination with BG represents a tremendous opportunity to create value for both sets of shareholders, particularly in deep water and [liquified natural gas]," Shell CEO Ben van Beurden said. "The combination with BG is a strong platform to refocus the company, to create a simpler and more competitive Shell.
"At the same time, Shell is pulling multiple levers to manage through the current oil price downturn. We have delivered in 2015, maintaining a strong balance sheet, and achieving some $12bn of cost and capital spending reductions."
Shell's severe cost-saving efforts, which include asset sales adding up to $20bn between 2014 and 2015, is also part of an effort to deal with the record low oil prices. The Dutch firm says it is on track to sell a total of $30bn worth of assets between 2016 and 2018.
"Shell's track record shows we can adapt our financial framework, cost structure and strategy to any reasonably expected oil price environment, in order to deliver competitive returns to shareholders," Van Beurden said. The oil tie-up is set to be completed by early 2016, as Shell and BG had previously promised.