5 things to know about the biggest energy deal in a decade

Fortune

Royal Dutch Shell Plc [fortune-stock symbol= »RDSAF »] is taking over BG Group Plc [fortune-stock symbol= »BRGYY »] in a $70 billion deal, the biggest the energy industry has seen in over a decade, and the clearest sign yet of consolidation pressures caused by last year’s collapse in oil prices. Here’s what you need to know.

1. It’s a landmark moment for the sector. Big mergers in the energy industry typically happen when it becomes cheaper to buy oil and gas reserves on the stock market than to drill for them. BG’s shares had fallen over 50% since January last year, and there was no way Shell could develop a comparable portfolio of assets organically for less than what it’s paying for BG today. Even if the number of potential candidates for such deals is smaller than it was 15 years ago, the same logic will surely apply to some other oil and gas…

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