Oil mega-merger boosts stocks

Stocks remained mostly positive in trading on Wednesday, largely due to the upcoming mega-merger in the oil and gas sector.

Confirmation that Royal Dutch Shell has agreed to pay $70 billion for its smaller rival, BG Group, lifted markets. The deal will be the biggest the energy sector has seen in over ten years, and sent BG Group’s shares over 40 per cent higher.

However, Shell’s share price declined a little on the day, due to the very high premium it is offering. Despite this, the long-term outlook is particularly rosy for Shell, as it will bolster its position as the largest FTSE 100 constituent by far.

According to analysts, the opportunistic deal could prompt other companies to follow suit, taking advantage of last year’s decline in oil prices, which has battered some stocks more than others.

Over the last 12 months, BG shares slid around 30 per cent, while Shell’s only lost ten per cent.

Tullow Oil saw its shares plummet around 65 per cent in the last year, and Premier Oil lost 55 per cent of its price. There’s a chance that these companies could be snapped up by other predatory sector giants.