’s chief executive, Ben van Beurden, can breathe easier after shareholders backed his big gamble that oil prices would rebound. Only 17 percent of investors voted against his on Wednesday.
Cost savings estimated at $3.5 billion will help assuage some worries, and paying partly in shares insulates some of the market effect, but the $60-a-barrel oil that Mr. van Beurden says is needed for the deal to create economic value still looks far away.
Brent crude futures have dropped 46 percent since Shell announced the merger last April, forcing Mr. van Beurden to find more cost savings. About 2,800 jobs will be cut from the combined company because of the deal, while Shell is reducing its work force by 7,500 from 2015 to 2016. More savings may have to be found if oil prices continue falling. BG’s current headquarters in the sleepy English town of Reading are likely to become a stranded asset.
The vote may look like a vote of confidence that Mr. van Beurden can cut costs to the bone and that oil prices will rise. It no doubt helps that oil bears will have sold out long ago — and that there is little else for oil majors to do with their cash beyond hoarding it or giving it back. Shell already abandoned plans to drill in the Arctic back in September. Teaming up with BG looks less risky, but should crude oil plummet to $20 a barrel and stay there, Mr. van Beurden’s big bet could be his last.