REG-Royal Dutch Shell: Recommended Cash & Share Offer for BG Group by Shell PLC <Origin Href="QuoteRef">RDSa.L</Origin> - Part 2

ShellAnnouncement

08/04/2015 07:22

- Part 2: For the preceding part double click  ID:nPRr8DD4Ba 

costs of approximately $980 million incurred in the first
three years post completion to the end of 2018, of which approximately 65%
would be incurred in 2016 and 30% in 2017. No material costs are expected to
arise in relation to the implementation of the reduction in exploration
expenditure.

Please refer to Appendix 5 for further detail on these estimated synergies.
These estimated synergies have been reported on under the City Code by Deloitte
LLP, and by Shell's financial adviser, Bank of America Merrill Lynch. Copies of
their letters are included in Parts B and C of Appendix 5 of this Announcement.
References in this Announcement to those estimated synergies should be read in
conjunction with those parts of Appendix 5.

In addition, Shell is confident of realising additional synergies that cannot
be quantified for reporting under the City Code. These include LNG integration
opportunities in the Atlantic basin and in Trinidad; and project coordination
and best practice learnings in deep water Brazil.

 7. Financial effects of the Combination
   
Shell believes that there are significant benefits to its shareholders from a
combination with BG.

  * Shell expects the Combination to be mildly accretive to earnings per share
    in 2017 and strongly accretive to earnings per share from 2018 onwards, on
    a current cost of supply basis and excluding identified items.10
   
  * Shell expects the Combination to be accretive to cash flow from operations
    per share from 2016. 10
   
  * The Combination would have reduced Shell's return on average capital
    employed by around 1.5%, on a 2014 pro-forma CCS basis, excluding
    identified items. Shell expects the impact on return on average capital
    employed from the Combination to be neutral from 2018.10 Shell intends to
    continue its drive for higher returns over time with potential for growth
    in returns after 2018, assuming flat oil prices.
   
Further Information

Shell's appraisal of BG's intrinsic asset value assessment is based across a
range of long term oil price assumptions, where Shell uses Brent oil prices of
$70-$90-$110 per barrel (on 2014 real terms basis).

Per share impacts assume Brent oil prices 2016 $67/bbl; 2017 $75/bbl; 2018-2020
$90/bbl (all on a 2014 real terms basis) and completion of the Combination in
early 2016.

The Combination will be presented in Shell's accounts under IFRS 3 and 13. This
will result in an annual non-cash post tax charge to the profit and loss
account through a step up in annual depreciation charges of approximately $2
billion. The final figure will be assessed once the Combination has been
completed.

10. Per share impacts assume Brent oil prices 2016 $67/bbl; 2017 $75/bbl;
    2018-2020 $90/bbl (all on a 2014 real terms basis) and completion of the
    Combination in early 2016. The statements that the Combination is expected
    to be accretive to cash flow from operations per share and to earnings per
    share, or that the effect on return on average capital employed is expected
    to be neutral in 2018, should not be construed as profit forecasts and are
    therefore not subject to the requirements of Rule 28 of the Code. Such
    statements should not be interpreted to mean that cash flow from operations
    and earnings per share, or income on a clean current cost of supply ("CCS)"
    basis, in any future financial period will necessarily match or be greater
    than those for the relevant preceding financial period.

   
 8. Pre-Conditions and Conditions
   
The receipt of competition authority clearances in the EU, Brazil, China, and
Australia, as well as foreign investment approval in Australia, are
Pre-Conditions to the Combination.

It is expected that the Scheme Document will be despatched to BG Shareholders
no later than 28 days after the date on which the Pre-Conditions are satisfied
and/or waived, as applicable, save as the Panel may otherwise permit.

In addition to the Pre-Conditions, the Combination is conditional, among other
things, on: (i) the BG Meetings being held no later than the 22nd day after the
expected date of the BG Meetings to be set out in the Scheme Document in due
course (or such later date as may be agreed between Shell and BG); (ii)
approval by the requisite majorities of BG Shareholders at the BG Meetings;
(iii) the Scheme being sanctioned by the Court no later than the 22nd day after
the expected date of the Scheme Court Hearing to be set out in the Scheme
Document in due course (or such later date as may be agreed between Shell and
BG); (iv) the Scheme becoming effective no later than the Long Stop Date; and
(v) approval by Shell Shareholders of the Shell Resolutions at the Shell
General Meeting.

The Combination is also conditional on the receipt of various other antitrust
and foreign investment approvals, other regulatory consents and waivers or
non-exercise of any termination rights, pre-emption rights, rights of first
refusal or similar rights in a number of jurisdictions, including (where
required) Brazil, Trinidad and Tobago, the US, Tanzania, Kazakhstan, Norway and
the UK. The relevant Conditions are contained in paragraphs (g), (h), (i) and
(j) of Part A of Appendix 2.

 9. Information relating to BG
   
BG is a world IOC leader in natural gas, with a broad portfolio of business
interests focused on exploration and production and LNG. Active in more than 20
countries on five continents, BG combines a deep understanding of gas markets
with a proven track record in finding and commercialising reserves.

BG's strategy is to create value by leveraging its capabilities in exploration
and from its highly competitive LNG business. BG's Upstream production is
currently sourced from base assets in ten countries and key growth projects in
Brazil and Australia. Wide geological technical expertise combined with
commercial agility enables BG to access exploration opportunities, targeting
low-cost early entry positions. BG also explores at existing hubs, aiming to
leverage basin knowledge and existing infrastructure. In LNG, the BG Group's
skills and capabilities span the whole LNG value chain.

BG has two business segments: Upstream and LNG Shipping & Marketing.

Upstream

BG explores for, develops, produces and markets gas and oil around the world.
The Upstream business segment covers exploration and production activities plus
liquefaction operations associated with integrated LNG projects.

LNG Shipping & Marketing

BG purchases, ships, markets and sells LNG. The LNG Shipping & Marketing
segment covers these activities, as well as the BG Group's interests and
capacity in regasification facilities.

For the year ended 31 December 2014, on a business performance basis11, BG
generated revenue and other operating income of $19,546 million and profit
before tax of $6,268 million, pre-tax operating cash flow of $10,015 million
and production of 606 kboepd. As at 31 December 2014, BG had gross assets of
$61,846 million.

10. Information relating to Shell
   
Shell is one of the world's largest independent oil and gas companies in terms
of market capitalisation, operating cash flow and production, aiming for strong
operational performance and productive investments around the world.

As at 7 April 2015, the market capitalisation of Shell was approximately $201.2
billion and for the year ended 31 December 2014, Shell had net cash flow from
operations of $45 billion and production of 3,080 kboepd.

Shell explores for oil and gas worldwide, both from conventional fields and
from sources such as tight rock, shale and coal formations, develops new oil
and gas supplies from major fields and continues to expand its integrated gas
business.

Shell operates a portfolio of refineries and chemical plants enabling it to
capture value from the oil and gas that it produces, and has a strong retail
position not only in major industrialised countries but also in developing
countries.

Shell's reporting segments are Upstream, Downstream and Corporate. Upstreamcomprises the operating segments Upstream International and Upstream Americas.
Upstream and Downstream earnings include their respective elements of Projects
& Technology and of trading activities. Corporate comprises Shell's holdings
and treasury organisation, including its self-insurance activities as well as
its headquarters and central functions.

Upstream

Shell's Upstream business searches for and recovers crude oil and natural gas.
Shell Upstream liquefies and transports natural gas, and operates the
infrastructure needed to deliver both oil and natural gas to market. The
Upstream business also extracts bitumen from oil sands and

11. Business performance excludes discontinued operations and disposals,
    certain re-measurements and impairments and certain other exceptional items
    as exclusion of these items provides a clear and consistent presentation of
    the underlying operating performance of the BG Group's on-going business.
    After disposals, re-measurements and impairments, BG generated total
    revenue and other operating income of $19,949 million and a total loss
    before tax of $2,330 million, each for the year ended 31 December 2014.
   

converts it into synthetic crude oil. Shell is also a developer of wind power
as a means to generate electricity.

Shell's Upstream businesses are grouped into two organisational units: Upstream
Americas, covering the Americas, and Upstream International, covering the rest
of the world, with major interests in Europe, Asia/Middle East/Russia,
Australia/Oceania and Africa.

Downstream

Shell's Downstream business manages its refining and marketing activities for
oil products and chemicals. Refining includes manufacturing, supply and
shipping of crude oil. Marketing sells a range of products, including fuels,
lubricants, bitumen and liquefied petroleum gas, for home, transport and
industrial use. Chemicals produces and markets petrochemicals for industrial
customers, including the raw materials for plastics, coatings and detergents.

The Downstream business also trades crude oil, oil products and petrochemicals
(including supply to Shell's own businesses), markets gas and power and
oversees Shell's interests in alternative energy (excluding wind) and CO2
management.

Projects & Technology

Shell's Projects & Technology organisation manages the delivery of major
projects and drives research and innovation to develop new technologies. Shell
Projects & Technology provides technical services and technology capability in
upstream and downstream activities and is also responsible for providing
leadership across Shell in the areas of safety and environment and contracting
and procurement.

11. Management, employees and locations
   
Shell attaches great importance to the skills and experience of the existing
management and employees of BG. The Combined Group will augment the
capabilities of both Shell and BG and will offer significant opportunities for
employees in a business of greater size and scope and will incorporate the
skills and talents present in both companies.

Shell confirms that it has given assurances to the BG Directors that, upon and
following completion of the Combination, it intends to fully safeguard the
existing employment and pension rights of all of the BG Group's management and
employees.

The Shell Board recognises that in order to achieve the expected benefits of
the Combination, operational and administrative restructuring will be required
following completion of the Combination. The detailed steps for such a
restructuring are not yet known but Shell will aim to retain the best talent
across the Combined Group.

12. Shell A Share alternative and difference between Shell A and B Shares
   
Shell A Share alternative

In addition to the Mix and Match Facility described below, as an alternative to
receiving the share component of the Consideration in the form of Shell B
Shares, BG Shareholders will be able to elect to receive the share component in
the form of Shell A Shares at the same exchange ratio.

If a BG Shareholder does not make an election to receive the share component of
the Consideration in the form of Shell A Shares, it will (subject to paragraph
13 below) receive 0.4454 Shell B Shares per BG Share in respect of the share
component of the Consideration.

Difference between Shell A Shares and Shell B Shares

Shell is incorporated in England and Wales and tax-resident in the Netherlands.
It is therefore generally required by Dutch law to withhold tax on dividends on
its ordinary shares, subject to the provisions of any applicable tax convention
or domestic law. Dividends paid on Shell A Shares have a Dutch source for tax
purposes and are subject to Dutch withholding tax; there is no Dutch
withholding tax on dividends on Shell B Shares provided that such dividends are
paid pursuant to the dividend access mechanism established by Shell, under
which dividends paid are treated as UK-sourced for tax purposes.

Under the existing Shell dividend access mechanism, a dividend access share has
been issued by Shell Transport to a dividend access trustee which holds any
dividends paid in respect of the dividend access share on trust for the holders
of Shell B Shares from time to time and arranges for prompt disbursement of
such dividends to holders of Shell B Shares. Following the declaration of a
dividend by Shell on the Shell B Shares, Shell Transport may declare a dividend
on the dividend access share. Shell Transport may not declare a dividend on the
dividend access share before Shell declares a dividend on the Shell B Shares
and in no event may the aggregate amount of the dividend paid by Shell
Transport under the dividend access mechanism for a particular period exceed
the aggregate amount of the dividend declared by the Shell Board on the Shell B
Shares in respect of the same period.

All dividends with respect to Shell B Shares have been paid on the dividend
access share pursuant to the dividend access mechanism since it was put in
place in 2005.

In accordance with the terms of the consent to the issue of Shell B Shares
received from the Dutch Revenue Service described in paragraph 13 below, the
dividend access trustee will, under the Scheme, obtain a new dividend access
share in BG's share capital and, following completion of the Combination,
dividends paid by BG on the dividend access share will form part of the
dividend access mechanism described above.

Further details on the Shell A Shares, Shell B Shares and the operation of the
dividend access mechanism following completion of the Combination will be
provided in the Scheme Document and the Prospectus. As is currently the case,
the dividend access mechanism may be suspended or terminated at any time, for
any reason and without financial recompense and, accordingly, there can be no
certainty that holders of Shell B Shares will receive dividends via the
dividend access mechanism following completion of the Combination.

13. Consent to the issue of Shell B Shares
   
Any new issue of Shell B Shares benefitting from the dividend access
arrangements described in paragraph 12 above requires prior consultation with,
and the consent of, the Dutch Revenue Service. Shell and the Dutch Revenue
Service have entered into a written settlement agreement under which the Dutch
Revenue Service has provided its consent to the issue of such Shell B Shares in
connection with the implementation of the Combination pursuant to the Scheme.

In accordance with and subject to paragraph 27 below, Shell reserves the right
to implement the Combination by way of an Offer in certain circumstances. In
such circumstances, the consent of the Dutch Revenue Service to the issue of
Shell B Shares described above would cease to be in force and the share
component of the Consideration would comprise Shell A Shares only. BG
Shareholders would in such circumstances (if Shell is permitted to exercise its
right to implement the Combination by way of an Offer as described in paragraph
27 below) be entitled to receive 383 pence in cash and 0.4454 Shell A Shares
per BG Share.

14. Mix and Match Facility
   
BG Shareholders (other than certain Overseas Shareholders) will be entitled to
elect to vary the proportions in which they receive New Shell Shares and cash
in respect of their holdings of BG Shares. However, the total number of New
Shell Shares that will be issued and the maximum amount of cash that will be
paid under the terms of the Combination will not be varied as a result of
elections made under the Mix and Match Facility.

Accordingly, elections made by BG Shareholders under the Mix and Match Facility
will be satisfied only to the extent that other BG Shareholders make
off-setting elections. To the extent that elections cannot be satisfied in
full, they will be scaled down on a pro rata basis. As a result, BG
Shareholders who make an election under the Mix and Match Facility will not
know the exact number of New Shell Shares or the amount of cash they will
receive until settlement of the Consideration due to them, although an
announcement will be made of the approximate extent to which elections under
the Mix and Match Facility will be satisfied.

The Mix and Match Facility will not affect the entitlement of any BG
Shareholder who does not make an election under the Mix and Match Facility. Any
such BG Shareholder will receive 383 pence in cash and 0.4454 New Shell Shares
for each BG Share it holds.

Further details of the Mix and Match Facility (including the action to take in
order to make a valid election, the deadline for making elections, and the
basis on which entitlement to receive cash may be exchanged for an entitlement
to additional New Shell Shares (or vice versa)) for BG Shareholders will be
included in the Scheme Document.

The Mix and Match Facility is conditional upon the Combination becoming
effective.

15. BG Share Plans
   
Participants in any of the BG Share Plans will be contacted regarding the
effect of the Combination on their rights under those plans and provided with
further details concerning the proposals which will be made to them in due
course. Details of the proposals will be set out in the Scheme Document and in
separate letters to be sent to participants in the BG Share Plans.

16. Financing of the Combination
   
Shell intends to finance the cash consideration payable to BG Shareholders
pursuant to the Combination from existing cash resources and third party debt.

Shell has entered into a bridge bank facility with Bank of America, N.A. as
lender and Bank of America Merrill Lynch International Limited as mandated lead
arranger and facility agent in connection with the financing of the cash
consideration payable to BG Shareholders pursuant to the Combination.

Bank of America Merrill Lynch is satisfied that sufficient resources are
available to Shell to satisfy in full the cash consideration payable pursuant
to the Combination.

As a result of the Combination, balance sheet gearing would have been
approximately 20% for the Combined Group on a 2014 pro-forma basis.

Further information on the financing of the Combination will be set out in the
Scheme Document.

17. Offer-related arrangements
   
Confidentiality Agreements

Shell and BG have entered into a mutual Confidentiality Agreement dated 31
March 2015 pursuant to which each of Shell and BG has undertaken, among other
things, to keep certain information relating to the Combination and the other
party confidential and not to disclose it to third parties (other than to
permitted parties) unless required by law or regulation. These confidentiality
obligations will remain in force until completion of the Combination.

Shell and BG have also entered into a Clean Team Confidentiality Agreement
dated 2 April 2015 which sets out how any confidential information that is
competitively sensitive can be disclosed, used or shared.

Co-operation Agreement

Shell and BG have entered into the Co-operation Agreement pursuant to which
Shell has agreed to use its reasonable endeavours to secure the regulatory
clearances and authorisations necessary to satisfy the Pre-Conditions and
Regulatory Conditions, including by accepting the imposition of, or offering,
commercially reasonable undertakings or commitments by or to the relevant
authorities.

Shell and BG have agreed to certain undertakings to co-operate and provide each
other with reasonable information, assistance and access in relation to the
filings, submissions and notifications to be made in relation to such
regulatory clearances and authorisations. Shell and BG have also agreed to
provide each other with reasonable information, assistance and access for the
preparation of the key shareholder documentation.

Shell and BG have also agreed certain matters regarding the written settlement
agreement under which the Dutch Revenue Service has provided its consent to the
issue of Shell B Shares benefitting from the dividend access arrangements
described in paragraph 12 above in connection with the implementation of the
Combination pursuant to the Scheme (as further described in paragraph 13
above).

Shell has the right to terminate the Co-operation Agreement if the BG Board
withdraws or modifies its recommendation of the Scheme; if the Court Meeting
and the Scheme Court Hearing are not held by the specified dates; upon a Break
Payment Event (as defined below); and where a competing proposal is recommended
or effected. The Co-operation Agreement will also terminate on Shell notifying
BG of a Pre-Condition or Condition not having been satisfied or waived or
having become incapable of satisfaction or waiver (where its invocation has
been permitted by the Panel); if the Scheme is withdrawn or lapses (other than
pursuant to Shell's right to switch to an Offer or where such withdrawal or
lapse is followed within five Business Days by an announcement by Shell or any
person acting in concert with Shell of a firm intention to make an offer on
substantially the same or improved terms); or if the Scheme has not become
effective by the Long Stop Date.

The Co-operation Agreement records Shell's and BG's intention to implement the
Combination by way of the Scheme, subject to the ability of Shell to proceed by
way of an Offer in the circumstances described in paragraph 27 below.

By way of compensation for any loss suffered by BG in connection with the
preparation and negotiation of the Combination and the documents relating it,
Shell has agreed to pay or procure the payment to BG of £750 million if:

  * on or prior to the Long Stop Date, the Shell Board withdraws its
    recommendation to Shell Shareholders to vote in favour of the Combination,
    does not include such recommendation in the Circular or announces its
    intention not to do so, and, in any such case, Shell or BG exercises its
    right to terminate the Co-operation Agreement as a result;
   
  * on or prior to the Long Stop Date, Shell invokes (with the permission of
    the Panel) any Pre-Condition and/or any Regulatory Condition; or
   
  * on the Long Stop Date, any Pre-Condition and/or Regulatory Condition is not
    satisfied or waived by Shell,
   
(each a "Break Payment Event").

However, no payment will be made if certain termination events have occurred;
if the Break Payment Event has been caused to a material extent by BG's breach
of certain obligations under the Co-operation Agreement relating to
co-operation and assistance with regulatory clearances and authorisations and
key transaction documents; or Shell has exercised its right to implement the
Combination by way of an Offer in circumstances where a third party's firm
intention to make an offer for BG has been recommended by the BG Board or the
BG Board has withdrawn its recommendation of the Scheme.

The Co-operation Agreement also contains provisions that will apply in respect
of the BG Share Plans and certain other employee incentive arrangements.

18. Dividends
   
The Boards of Shell and BG have agreed that BG Shareholders will continue to be
entitled to receive their final dividend for 2014 of 14.37 cents (9.52 pence)
per BG Share which has already been announced by BG, as well as an interim
dividend in respect of the six month period up to 30 June 2015 of not more than
the interim dividend in respect of the six month period up to 30 June 2014 of
14.38 cents per BG Share. In addition, should completion of the Combination
occur after the record date for Shell's 2015 fourth quarter interim dividend,
BG Shareholders would be entitled to receive a further BG dividend in respect
of 2015 of not more than the final dividend for 2014 of 14.37 cents per BG
Share. If, however, completion of the Combination occurs prior to the record
date for Shell's 2015 fourth quarter interim dividend, BG Shareholders would
receive that Shell dividend and would not receive a further BG dividend for
2015.

If any BG dividend, distribution or return of value is declared, announced,
made or paid at any time in excess of those described above, Shell reserves the
right to reduce the value implied under the terms of the Combination at such
date by an amount equal to the excess amount (based on the $/£ exchange rate at
the time of such declaration, announcement, making or payment). In such
circumstances, to the extent possible, the cash component of the Consideration
would be reduced by the amount of such excess.

19. Disclosure of interests in BG
   
In connection with the Combination, Shell will make a public Opening Position
Disclosure setting out details of its interests or short positions in, or
rights to subscribe for, any relevant securities of BG by no later than 12 noon
on 21 April 2015.

As at the close of business on 7 April 2015, being the last Business Day prior
to the publication of this Announcement, save for the irrevocable undertakings
referred to in paragraph 22 below and 6,780 BG Shares held by certain Shell
Directors whose interests in BG Shares have been notified to Shell, none of
Shell nor, so far as Shell is aware, any person acting, or deemed to be acting,
in concert (within the meaning of the City Code) with Shell (including Shell
Directors), other than by reason of index tracking activities carried out in
the ordinary course (underlying interests in BG Shares in relation to which
will be included in Shell's Opening Position Disclosure), has:

  * any interest in, or right to subscribe for, any BG Shares nor does any such
    person have any short position in BG Shares, including any short position
    under a derivative, any agreement to sell, any delivery obligation or right
    to require another person to purchase or take delivery of BG Shares;
   
  * procured an irrevocable commitment or letter of intent to accept the terms
    of the Combination in respect of BG Shares; or
   
  * borrowed or lent any BG Shares or entered into any financial collateral
    arrangements relating to BG Shares.
   
It has not been possible by the date of this Announcement to ascertain the
interests in BG Shares (if any) of all of Shell's concert parties. Further
enquiries will be completed prior to publication of Shell's Opening Position
Disclosure which will include details of any interests or short positions in,
or rights to subscribe for, any relevant securities of BG held by all persons
acting in concert with Shell.

Furthermore, save for the irrevocable undertakings described in paragraph 22
below, no arrangement exists between Shell or BG or any person acting in
concert with Shell or BG in relation to BG Shares. For these purposes, an
arrangement includes any indemnity or option arrangement, any agreement or any
understanding, formal or informal, of whatever nature, relating to BG Shares
which may be an inducement to deal or refrain from dealing in such securities.

20. Scheme
   
It is intended that, once the Pre-Conditions have been satisfied or waived, as
applicable, the Combination will be effected by a court sanctioned scheme of
arrangement between BG and the Scheme Shareholders under Part 26 of the
Companies Act 2006. The purpose of the scheme is to provide for Shell (or its
nominee) to become the owner of the whole of the issued and to be issued share
capital of BG.

Under the Scheme, save as described in the following sentence, the Scheme
Shares will be transferred to Shell in consideration for which Scheme
Shareholders will receive the Consideration. Under the Scheme, the dividend
access trustee will obtain a dividend access share in BG's share capital as
described in paragraph 12 above.

Once the Pre-Conditions have been satisfied or waived, as applicable, the
Combination will be subject to the Conditions and certain further terms set out
in Appendix 2 and to the full terms and conditions which will be set out in the
Scheme Document.

To become effective, the Scheme requires the approval of Scheme Shareholders by
the passing of a resolution at the Court Meeting. The resolution must be
approved by a majority in number of the Scheme Shareholders present and voting
(and entitled to vote), either in person or by proxy, representing not less
than 75% of the Scheme Shares held by such Scheme Shareholders. In addition, a
special resolution must be passed at the BG General Meeting to deal with
certain ancillary matters which requires the approval of BG Shareholders
representing at least 75% of the votes cast at the BG General Meeting (either
in person or by proxy). The BG General Meeting will be held immediately after
the Court Meeting.

The BG Meetings are to be held no later than the 22nd day after the expected
date of the BG Meetings to be set out in the Scheme Document in due course (or
such later date as may be agreed between Shell and BG).

Following the BG Meetings, the Scheme must be sanctioned by the Court no later
than the 22nd day after the expected date of the Scheme Court Hearing to be set
out in the Scheme Document in due course (or such later date as may be agreed
between Shell and BG). The Scheme will only become effective once a copy of the
Scheme Court Order is delivered to the Registrar of Companies.

Upon the Scheme becoming effective, it will be binding on all BG Shareholders,
irrespective of whether or not they attended or voted at the BG Meetings and
the Consideration will be despatched by Shell to Scheme Shareholders no later
than 14 days after the Effective Date.

The Scheme Document will include full details of the Scheme, together with
notices of the Court Meeting and the BG General Meeting and the expected
timetable, and will specify the action to be taken by Scheme Shareholders. It
is expected that the Scheme Document and Prospectus (as described in paragraph
21 below) will be despatched to BG Shareholders towards the end of 2015 or in
early 2016, and no later than 28 days after the date on which the
Pre-Conditions are satisfied and/or waived, as applicable, save as the Panel
may otherwise permit.

Fractions of New Shell Shares will not be allotted to BG Shareholders but will
be aggregated and sold as soon as practicable after the Scheme becomes
effective. The net proceeds of such sale will then be paid in cash to the
relevant BG Shareholders in accordance with their fractional entitlements.
Individual entitlements, however, to amounts of less than £5 will not be paid
but will be retained for the benefit of Shell.

The Scheme will be governed by English law. The Scheme will be subject to the
applicable requirements of the City Code, the Panel, the London Stock Exchange
and the UK Listing Authority.

The Scheme is expected to become effective in early 2016.

21. Shell Shareholder approval and Prospectus
   
As a result of the size of the acquisition, the Combination constitutes a Class
1 transaction for Shell for the purposes of the Listing Rules. Accordingly,
Shell will be required to seek the approval of Shell Shareholders for the
Combination at the Shell General Meeting.

Shell will prepare and send to Shell Shareholders the Circular summarising the
background to and reasons for the Combination which will include a notice
convening the Shell General Meeting. The Combination is conditional on, among
other things, the Shell Resolutions being passed by the requisite majority of
Shell Shareholders at the Shell General Meeting (but not, for the avoidance of
doubt, any other resolutions to be proposed at the Shell General Meeting which
shall not be conditions to the Combination).

It is expected that the Circular will be posted to Shell Shareholders at the
same time as the Scheme Document is posted to BG Shareholders and that the
Shell General Meeting will be held at or around the same time as the BG
Meetings.

Shell will also be required to produce the Prospectus in connection with the
issue of the New Shell Shares. The Prospectus will contain information relating
to the Shell Group, the BG Group, the Combined Group and the New Shell Shares.
It is expected that the Prospectus will be published at or around the same time
as the Scheme Document is posted to BG Shareholders.

22. Irrevocable undertakings
   
The BG Directors have irrevocably undertaken to vote in favour of the Scheme in
respect of their own beneficial holdings totalling 217,564 BG Shares,
representing in aggregate approximately 0.006% of BG's issued share capital.
See Appendix 4 for a breakdown of these irrevocable undertakings.

These irrevocable undertakings remain binding if a higher competing offer for
BG is made but cease to be binding on and from the earlier of (i) the Long Stop
Date; and (ii) the date on which the Scheme is withdrawn or lapses in
accordance with its terms.

23. Delisting and re-registration
   
It is intended that dealings in BG Shares should be suspended shortly prior to
the Effective Date at a time to be set out in the Scheme Document. It is
further intended that an application will be made to the London Stock Exchange
for the cancellation of the trading of BG Shares on its main market for listed
securities and the UK Listing Authority will be requested to cancel the listing
of BG Shares on the Official List to take effect on or shortly after the
Effective Date.

Share certificates in respect of the BG Shares will cease to be valid and
should be destroyed on the first Business Day following the Effective Date.

In addition, entitlements held within the CREST system to the BG Shares will be
cancelled on the first Business Day following the Effective Date.

As soon as possible after the Effective Date, it is intended that BG will be
re-registered as a private limited company.

If the Scheme is sanctioned by the Court, BG Shares held in treasury will be
cancelled prior to the Scheme Record Time.

24. BG ADRs
   
Shell and BG have agreed that they will put arrangements in place to allow
holders of BG ADRs to participate in the Combination. The BG Depositary will
contact holders of BG ADRs with further details of these proposals in due
course.

BG ADR holders will not be entitled to attend the BG Meetings but may vote in
such meetings by returning a voting instruction card (which will be sent out in
due course) to the BG Depositary or by instructing their financial intermediary
to do so. In addition, if BG ADR holders surrender their BG ADRs to the BG
Depositary for cancellation and withdraw the BG Shares underlying the BG ADRs
in sufficient time to be entered on the BG register of members, they may attend
and vote at the BG Meetings as a BG Shareholder. However, any withdrawal of BG
Shares underlying the BG ADRs will result in the incurrence of cancellation
fees, other expenses and any applicable taxes by the holder.

Following the Effective Date, Shell intends to terminate BG's ADR programme.

25. Overseas Shareholders and holders of BG ADRs
   
The availability of the Combination, and the distribution of this Announcement
to persons who are not resident in the United Kingdom, may be affected by the
laws of the relevant jurisdiction in which they are located. Such persons
should inform themselves of and observe any applicable legal or regulatory
requirements of their jurisdiction. BG Shareholders and holders of BG ADRs who
are in doubt about such matters should consult an appropriate independent
professional adviser in the relevant jurisdiction without delay.

This Announcement does not constitute an offer for sale of any securities or an
offer or an invitation to purchase any securities. BG Shareholders are advised
to read carefully the Scheme Document, the Prospectus, and the forms of proxy
once these have been dispatched.

26. Documents on website
   
Copies of the following documents will by no later than 12 noon on 9 April 2015
be published on www.shell.com and www.bg-group.com:

(a) this Announcement;

(b) the irrevocable undertakings listed in Appendix 4;

(c) the Confidentiality Agreements referred to in paragraph 17 above;

(d) the Co-operation Agreement referred to in paragraph 17 above; and

(e) Shell's financing arrangements in connection with the Combination as
referred to in paragraph 16 above.

27. General
   
Shell reserves the right (with the consent of the Panel) to implement the
Combination by way of an Offer: (i) with the consent of the BG Board; (ii) if a
third party announces a firm intention to make an offer for BG which is
recommended by the BG Board; or (iii) if the BG Board otherwise withdraws its
recommendation of the Combination. If the Combination is implemented by way of
an Offer, the consent of the Dutch Revenue Service to the issue of Shell B
Shares described in paragraph 13 would cease to be in force and the share
component of the Consideration would comprise Shell A Shares only. BG
Shareholders would in such circumstances (if Shell is permitted to exercise its
right to implement the Combination by way of an Offer) be entitled to receive
383 pence in cash and 0.4454 Shell A Shares per BG Share. In such an event the
Offer will be implemented on the same terms (subject to appropriate amendments,
including the offer of Shell A Shares alone in respect of the share component
of the Consideration, as described in paragraph 13 of this Announcement), so
far as applicable, as those which would apply to the Scheme and subject to the
amendment referred to in Part C of Appendix 2 of this Announcement.

If the Combination is effected by way of an Offer and such Offer becomes or is
declared unconditional in all respects and sufficient acceptances are received
Shell intends to: (i) request that the London Stock Exchange and the UK Listing
Authority cancel trading in BG Shares on the London Stock Exchange's main
market for listed securities and the listing of the BG Shares from the Official
List; and (ii) exercise its rights to apply the provisions of Chapter 3 of Part
28 of the Companies Act 2006 to acquire compulsorily the remaining BG Shares in
respect of which the Offer has not been accepted.

Important notices relating to financial advisers

Merrill Lynch International, a subsidiary of Bank of America Corporation, which
is authorised by the Prudential Regulation Authority and regulated by the FCA
and the Prudential Regulation Authority in the UK, is acting exclusively for
Shell and no one else in connection with the Combination and will not be
responsible to anyone other than Shell for providing the protections afforded
to its clients or for providing advice in relation to the Combination or any
other matters referred to in this Announcement.

Goldman Sachs International, which is authorised by the Prudential Regulation
Authority and regulated by the FCA and the Prudential Regulation Authority in
the UK, is acting for BG and no one else in connection with the matters
referred to in this Announcement and will not be responsible to anyone other
than BG for providing the protections afforded to its clients, or for giving
advice in connection with any matter referred to in this Announcement.

Robey Warshaw LLP, which is authorised and regulated by the FCA in the UK, is
acting as financial adviser exclusively for BG and no one else in connection
with the matters referred to in this Announcement and will not regard any other
person as its client in relation to the matters referred to in this
Announcement and will not be responsible to anyone other than BG for providing
the protections afforded to its clients, nor for providing advice in relation
to the matters referred to in this Announcement.

Further information

This Announcement is not intended to and does not constitute or form part of
any offer to sell or subscribe for or any invitation to purchase or subscribe
for any securities or the solicitation of any vote or approval in any
jurisdiction pursuant to the Combination or otherwise nor shall there be any
sale, issuance or transfer of securities of Shell or BG pursuant to the
Combination in any jurisdiction in contravention of applicable laws. The
Combination will be implemented solely pursuant to the terms of the Scheme
Document, which will contain the full terms and conditions of the Combination,
including details of how to vote in respect of the Combination. Any decision in
respect of, or other response to, the Combination should be made only on the
basis of the information contained in the Scheme Document.

This Announcement does not constitute a prospectus or prospectus equivalent
document.

Information relating to BG Shareholders

Please be aware that addresses, electronic addresses and certain other
information provided by BG Shareholders, persons with information rights and
other relevant persons for the receipt of communications from BG may be
provided to Shell during the Offer Period as required under Section 4 of
Appendix 4 of the City Code.

Overseas jurisdictions

The release, publication or distribution of this Announcement in jurisdictions
other than the United Kingdom may be restricted by law and therefore any
persons who are subject to the laws of any jurisdiction other than the United
Kingdom should inform themselves about, and observe any applicable
requirements. In particular, the ability of persons who are not resident in the
United Kingdom to vote their BG Shares with respect to the Scheme at the Court
Meeting, or to execute and deliver forms of proxy appointing another to vote at
the Court Meeting on their behalf, may be affected by the laws of the relevant
jurisdictions in which they are located.This Announcement has been prepared for
the purpose of complying with English law and the City Code and the information
disclosed may not be the same as that which would have been disclosed if this
Announcement had been prepared in accordance with the laws of jurisdictions
outside the United Kingdom.

Unless otherwise determined by Shell or required by the City Code, and
permitted by applicable law and regulation, the Combination will not be made
available, directly or indirectly, in, into or from a Restricted Jurisdiction
where to do so would violate the laws in that jurisdiction and no person may
vote in favour of the Combination by any such use, means, instrumentality or
form within a Restricted Jurisdiction or any other jurisdiction if to do so
would constitute a violation of the laws of that jurisdiction. Accordingly,
copies of this Announcement and any formal documentation relating to the
Combination are not being, and must not be, directly or indirectly, mailed or
otherwise forwarded, distributed or sent in or into or from any Restricted
Jurisdiction and persons receiving such documents (including custodians,
nominees and trustees) must not mail or otherwise forward, distribute or send
them in or into or from any Restricted Jurisdiction. If the Combination is
implemented by way of an Offer (unless otherwise permitted by applicable law
and regulation), the Offer may not be made directly or indirectly, in or into,
or by the use of mails or any means or instrumentality (including, but not
limited to, facsimile, e-mail or other electronic transmission, telex or
telephone) of interstate or foreign commerce of, or of any facility of a
national, state or other securities exchange of any Restricted Jurisdiction and
the Offer may not be capable of acceptance by any such use, means,
instrumentality or facilities.

The availability of New Shell Shares under the Combination to BG Shareholders
who are not resident in the United Kingdom may be affected by the laws of the
relevant jurisdictions in which they are resident. Persons who are not resident
in the United Kingdom should inform themselves of, and observe, any applicable
legal or regulatory requirements.

Further details in relation to BG Shareholders in overseas jurisdictions will
be contained in the Scheme Document.

Additional US information

The Combination relates to the shares of a UK company and is subject to UK
procedural and disclosure requirements that are different from those of the US.
Any financial statements or other financial information included in this
Announcement may have been prepared in accordance with non-US accounting
standards that may not be comparable to the financial statements of US
companies or companies whose financial statements are prepared in accordance
with generally accepted accounting principles in the US. It may be difficult
for US holders of shares to enforce their rights and any claims they may have
arising under the US federal securities laws in connection with the
Combination, since Shell and BG are located in a country other than the US, and
some or all of their officers and directors may be residents of countries other
than the United States. US holders of shares in BG or Shell may not be able to
sue Shell, BG or their respective officers or directors in a non-US court for
violations of US securities laws. Further, it may be difficult to compel Shell,
BG and their respective affiliates to subject themselves to the jurisdiction or
judgment of a US court.

Investors should be aware that Shell may purchase or arrange to purchase BG
Shares otherwise than under any takeover offer or scheme of arrangement related
to the Combination, such as in open market or privately negotiated purchases.

The Combination may be implemented under a scheme of arrangement provided for
under English company law. If so, it is expected that any securities to be
issued under the Combination would be issued in reliance upon the exemption
from the registration requirements of the US Securities Act, provided by
Section 3(a)(10) thereof and also would not be subject to the tender offer
rules under the US Exchange Act.

The Combination may, in the circumstances provided for in this Announcement, be
implemented by way of a takeover offer under English law. If so, any securities
to be issued under the Combination may be issued in reliance upon the exemption
from the registration requirements of the US Securities Act provided by Rule
802 thereunder. Alternatively, any securities to be issued under the
Combination may be registered under the US Securities Act. If the Combination
is implemented by way of takeover offer, it will be done in compliance with the
applicable rules under the US Exchange Act, including any applicable exemptions
provided under Rules 14d-1(c) and 14d-1(d) thereunder.

BG Shareholders and holders of BG ADRs are urged to read any documents related
to the Combination filed, furnished or to be filed or furnished with the SEC
because they will contain important information regarding the Combination and
any related offer of securities. Such documents will be available free of
charge at the SEC's web site at www.sec.gov and from Shell at www.shell.com.
Nothing in this Announcement shall be deemed an acknowledgement that any SECfiling is required or that an offer requiring registration under the US
Securities Act may ever occur in connection with the Combination.

Cautionary note regarding forward looking statements

This Announcement contains certain forward looking statements with respect to
the financial condition, results of operations and businesses of Shell and BG
and their respective Groups, and certain plans and objectives of Shell with
respect to the Combined Group. All statements other than statements of
historical fact are, or may be deemed to be, forward looking statements.
Forward looking statements are statements of future expectations that are based
on management's current expectations and assumptions and involve known and
unknown risks and uncertainties that could cause actual results, performance or
events to differ materially from those expressed or implied in these
statements. Forward looking statements include, among other things, statements
concerning the potential exposure of Shell, BG and the Combined Group to market
risks and statements expressing management's expectations, beliefs, estimates,
forecasts, projections and assumptions, including as to future potential cost
savings, synergies, earnings, cash flow, return on average capital employed,
production and prospects. These forward looking statements are identified by
their use of terms and phrases such as "anticipate", "believe", "could",
"estimate", "expect", "goals", "intend", "may", "objectives", "outlook",
"plan", "probably", "project", "risks", "seek", "should", "target", "will" and
similar terms and phrases.

There are a number of factors that could affect the future operations of Shell,
BG and the Combined Group and that could cause results to differ materially
from those expressed in the forward looking statements included in this
Announcement, including (without limitation): (a) price fluctuations in crude
oil and natural gas; (b) changes in demand for Shell, BG and the Combined
Group's products; (c) currency fluctuations; (d) drilling and production
results; (e) reserves estimates; (f) loss of market share and industry
competition; (g) environmental and physical risks; (h) risks associated with
the identification of suitable potential acquisition properties and targets,
and successful negotiation and completion of such transactions; (i) the risk of
doing business in developing countries and countries subject to international
sanctions; (j) legislative, fiscal and regulatory developments including
regulatory measures addressing climate change; (k) economic and financial
market conditions in various countries and regions; (l) political risks,
including the risks of expropriation and renegotiation of the terms of
contracts with governmental entities, delays or advancements in the approval of
projects and delays in the reimbursement for shared costs; and (m) changes in
trading conditions.

All forward looking statements contained in this Announcement are expressly
qualified in their entirety by the cautionary statements contained or referred
to in this section. Readers should not place undue reliance on forward looking
statements. Additional risk factors that may affect future results are
contained in Shell's Form 20-F for the year ended 31 December 2014 (available
at www.shell.com/investor and www.sec.gov). These risk factors expressly
qualify all forward looking statements contained in this Announcement and
should also be considered by the reader.

For a discussion of important factors which could cause actual results to
differ from forward looking statements relating to BG and the BG Group, refer
to BG's Annual Report and Accounts for the year ended 31 December 2014.

Each forward looking statement speaks only as of the date of this Announcement.
None of Shell, the Shell Group, BG or the BG Group undertakes any obligation to
publicly update or revise any forward looking statement as a result of new
information, future events or otherwise, except to the extent legally required.
In light of these risks, results could differ materially from those stated,
implied or inferred from the forward looking statements contained in this
Announcement.

Rounding

Certain figures included in this Announcement have been subjected to rounding
adjustments. Accordingly, figures shown for the same category presented in
different tables may vary slightly and figures shown as totals in certain
tables may not be an arithmetic aggregation of the figures that precede them.

No forecasts or estimates

No statement in this Announcement (including any statement of estimated
synergies) is intended as a profit forecast or estimate for any period and no
statement in this Announcement should be interpreted to mean that cash flow
from operations, free cash flow, earnings, earnings per share or income on a
clean current cost of supply ("CCS") basis for Shell, BG or the Combined Group,
as appropriate, for the current or future financial years would necessarily
match or exceed the historical published cash flow from operations, free cash
flow, earnings, earnings per share or income on a clean CCS basis for Shell or
BG as appropriate.

Quantified financial benefits

The statements in the Quantified Financial Benefits Statement relate to future
actions and circumstances which, by their nature, involve risks, uncertainties
and contingencies. The synergies and cost savings referred to may not be
achieved, or may be achieved later or sooner than estimated, or those achieved
could be materially different from those estimated. For the purposes of Rule 28
of the City Code, the Quantified Financial Benefits Statement contained in this
Announcement is the responsibility of Shell and the Shell Directors.

Rule 2.10 information

In accordance with Rule 2.10 of the City Code, Shell confirms that, as at the
date of this Announcement, it has the following relevant securities held and in
issue outside treasury: 3,894,584,881 A ordinary shares of €0.07 each, with
ISIN reference GB00B03MLX29; and 2,440,410,614 B ordinary shares of €0.07 each,
with ISIN reference GB00B03MM408, each admitted to trading on the main market
of the London Stock Exchange and on Euronext Amsterdam. The total number of
Shell A ordinary shares and B ordinary shares held and in issue outside
treasury is 6,334,995,495. Shell has A and B American Depositary Shares (ADSs)
listed on the New York Stock Exchange. The Bank of New York Mellon acts as
depositary. Each A ADS represents two A ordinary shares of €0.07 each and each
B ADS represents two B ordinary shares of €0.07 each. The Shell A ADSs have the
trading symbol RDS.A and ISIN US7802592060 and the Shell B ADSs have the
trading symbol RDS.B and ISIN US7802591070.

In accordance with Rule 2.10 of the City Code, BG confirms that, as at the date
of this Announcement, it has the following relevant securities held and in
issue outside treasury: 3,414,440,911 ordinary shares of 10 pence each that are
admitted to trading on the main market of the London Stock Exchange. The ISIN
for BG's ordinary shares is GB0008762899. BG has a sponsored Level 1 American
Depositary Receipts (ADR) programme. Each ADR represents one BG ordinary share.
The ADRs trade in the over-the-counter market, OTCQX International Premier. The
trading symbol for these securities is BRGYY and the ISIN is US0554342032.

Disclosure requirements of the City Code

Under Rule 8.3(a) of the City Code, any person who is interested in 1% or more
of any class of relevant securities of an offeree company or of any securities
exchange offeror (being any offeror other than an offeror in respect of which
it has been announced that its offer is, or is likely to be, solely in cash)
must make an Opening Position Disclosure following the commencement of the
offer period and, if later, following the announcement in which any securities
exchange offeror is first identified. An Opening Position Disclosure must
contain details of the person's interests and short positions in, and rights to
subscribe for, any relevant securities of each of (i) the offeree company and
(ii) any securities exchange offeror(s). An Opening Position Disclosure by a
person to whom Rule 8.3(a) applies must be made by no later than 3.30 pm
(London time) on the 10th Business Day following the commencement of the offer
period and, if appropriate, by no later than 3.30 pm (London time) on the 10th
Business Day following the announcement in which any securities exchange
offeror is first identified. Relevant persons who deal in the relevant
securities of the offeree company or of a securities exchange offeror prior to
the deadline for making an Opening Position Disclosure must instead make a
dealing disclosure.

Under Rule 8.3(b) of the City Code, any person who is, or becomes, interested
in 1% or more of any class of relevant securities of the offeree company or of
any securities exchange offeror must make a Dealing disclosure if the person
deals in any relevant securities of the offeree company or of any securities
exchange offeror. A dealing disclosure must contain details of the dealing
concerned and of the person's interests and short positions in, and rights to
subscribe for, any relevant securities of each of (i) the offeree company and
(ii) any securities exchange offeror(s), save to the extent that these details
have previously been disclosed under Rule 8. A dealing disclosure by a person
to whom Rule 8.3(b) applies must be made by no later than 3.30 pm (London time)
on the Business Day following the date of the relevant dealing.

If two or more persons act together pursuant to an agreement or understanding,
whether formal or informal, to acquire or control an interest in relevant
securities of an offeree company or a securities exchange offeror, they will be
deemed to be a single person for the purpose of Rule 8.3.

Opening Position Disclosures must also be made by the offeree company and by
any offeror and dealing disclosures must also be made by the offeree company,
by any offeror and by any persons acting in concert with any of them (see Rules
8.1, 8.2 and 8.4).

Details of the offeree and offeror companies in respect of whose relevant
securities Opening Position Disclosures and dealing disclosures must be made
can be found in the Disclosure Table on the Takeover Panel's website at
www.thetakeoverpanel.org.uk, including details of the number of relevant
securities in issue, when the offer period commenced and when any offeror was
first identified. You should contact the Panel's Market Surveillance Unit on
+44 (0)20 7638 0129 if you are in any doubt as to whether you are required to
make an Opening Position Disclosure or a dealing disclosure.

Publication on website and availability of hard copies

A copy of this Announcement is and will be available, subject to certain
restrictions relating to persons resident in Restricted Jurisdictions, for
inspection on Shell's website www.shell.com and on BG's website
www.bg-group.com by no later than 12 noon (London time) on the Business Day
following this Announcement. For the avoidance of doubt, the contents of the
websites referred to in this Announcement are not incorporated into and do not
form part of this Announcement.

Shell and BG Shareholders may request a hard copy of this Announcement by
contacting Equiniti during business hours on +44 (0)121 415 7073 (for Shell
Shareholders) or +44 (0)121 415 7029 (for BG Shareholders) or by submitting a
request in writing to Equiniti at Aspect House, Spencer Road, Lancing, West
Sussex BN99 6DA.

If you are in any doubt about the contents of this Announcement or the action
you should take, you are recommended to seek your own independent financial
advice immediately from your stockbroker, bank manager, solicitor, accountant
or independent financial adviser duly authorised under the Financial Services
and Markets Act 2000 (as amended) if you are resident in the United Kingdom or,
if not, from another appropriately authorised independent financial adviser.

                                  APPENDIX 1     

- More to follow, for following part double click  ID:nPRr8DD4Bc